Forget the $1 Million Benchmark: Why You Don’t Need $1 Million to Retire Comfortably
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- Опубликовано: 25 июн 2024
- Economist Andrew Briggs feature in USA Today - finance.yahoo.com/news/really...
00:00 Intro
01:45 The Reality
03:24 Social Security
03:49 The Recommendations
06:33 Too Conservative
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Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.
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Thanks for watching, I appreciate you!
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The thought of retirement makes me cry. My apologies to everyone who have retired and filing social security during this time after putting in all those years of work just to lose everything to a problem you weren't to blame for.it's especially difficult for people who are retired.
True, It has never been easier to understand how to build your money after retirement than it is right now with the inflation, when you may study and experience a completely variegated market passively by employing a successful portfolio-advisor. The impacts of the U.S. dollar's gain or fall on investments, in my opinion, are complex.
Even if you’re not skilled, it is still possible to hire one. I was a project manager and my personal portfolio of approximately $850k of my retirement pension took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my portfolio this red season. I’ve made over $250k since then.
Please can you leave the info of your investment advisor here? I’m in dire need for one
Well, there are a few out there who know what they are doing. I tried a few in the past years, but I’ve been with Sharon Ann Meny for the last five years or so, and her returns have been pretty much amazing.
She seems to be well-educated and well-read. I ran a Google search for her name and came across his website; thank you for sharing.
I'm favoured, $130K every week! I can now give back to the locals in my community and also support God's work and the church. God bless America.
Yes! I'm celebrating £32K stock portfolio today...
Started this journey with £3K.... I've invested no time and also with the right terms, now I have time for my family an…
when someone is straight forward and good at what she does best. People will always speak for them. For me I can would say give Mrs Sonia Duke of finance education a try and you be happy you did
As a beginner what do I need to do? How can I invest, on which platform? If you know any please share.
Started with 5,000$ and Withdrew profits
89,000$
I'm glad to write her tay I do hope she will help handle my paycheck properly☺️☺️☺️
Use Unimantic please!
Your explanation is clear and practical. Nevertheless, the market can undergo manipulation in various ways. While I initially grasped trading crypto assets, my technical analysis skills were a limiting factor. This changed when I came across Leah Foster Alderman's strategy. Day trading deserves increased attention, given its resilience to the market's unpredictable nature.
Thanks for sharing, I just did a web check with her full names mentioned
Be careful. Leah Foster Alderman is a scam artist. She pays people to put fake comments on RUclips! videos pumping her financial scam.
I can retire any time I want.
I just can’t live too long
About 10 minutes for me.
@@tomhuston8880😂😂
Finally! A realistic video about retirement. Almost nobody does this!
Completely agree, retirement is all about controlling and managing your cash flow. While a million dollar benchmark is a great goal, it is not needed.
I'm 48. My parents and their friends have all retired at this point. Only a few are millionaires. All the rest are just thrilled not to be working. They're living their best lives with no complaints, even if they have to pinch pennies. Contentment combined with social security and no debt seems make a baseline for joy when you're 67.
You're right. I know a guy probably worth 10 million. He's pushing 80, still works 40 plus hours a week. He's tighter than a nut on a sunken ship. Probably making half a million on his investments alone. His house, and land are worth a million or more.I don't know why the hell he's still working each kid will probably get at least 2 million. So he's basically working so his kids won't have to work as long and hard as he does. All his kids have homes worth a half million, and up. They were born with the silver spoon in their mouths. There road is smooth, thanks to their dad.
@@fml5910 He is working because lots of men enjoy working unless it is a really annoying job - what work is he doing?
No debt is the biggest part of that game plan. I am 70 and retired 4 years ago. Let my investmens grow whille living on SS and finally reached a million about 2 months ago. We'll be living llike kings when I tap into that at 4% withdrawal rate.
@@rupe53 A 4% withdrawal rate per month, year?
@@fml5910 4% annually is roughly $40k. This is a starting point that you can adjust to correct for inflation and try to maintain a lifestyle as time goes on. The first few years you are living on only your interest and never touching the base sum in the account(s) because hopefully your money is earning at least 5% so still growing. Maybe in a few years I will adjust that to 5%... and in a few more years to 6%. You can play with the numbers to suit your needs and timeline. In my case I am projecting 25 years, but I doubt I will live to be 95. Another formula suggested is divide by the number of years you project, 25 in this case, and go into your nest egg. 25 years into $1 million = $40k. (first year) Your nest egg grows / maintains so the following year you pull out 1/24 (24 years to go) and that number is $41,600. The following years you pull out 1/23 = $43,400. Somewhere in here you will be passing that threshold of exceeding the 5% interest rate and start going into the original sum, but this is doable for a LONG time.... and also keeps ahead of inflation while lasting at least 25 years.
Well explain thank you for bringing up this video Financial education is indeed required for more than 80% of the society in the country as very few are literate on the subject. The value of the US dollar is declining due to inflation, but it is increasing in comparison to other currencies and commodities such as gold and real estate. I'm worried that rising inflation will cause my 550k in my retirement funds to lose value, But with the help of Sandy Barclays I hit 220k this week from my investment of 45k, I am truly grateful for all the knowledge and nuggets you have given me over the past few months.
Sandy Barclays program is widely available online..
Exploring new investment opportunities demonstrates your proactive stance towards financial growth during these volatile times. Diversifying your portfolio can play a crucial role in effectiveIy mitigating risks..
Over the years, I've been a part of numerous trading programs, sifting through a barrage of information. Yet, nothing has come close to the sheer clarity, depth, and precision of Sandy insights. It's akin to finding a diamond in a coal mine.
Sandy gave me the autonomy I need to learn at my own pace and ask questions when I need to she’s so accommodating.
Greetings from Blairsville, Georgia I have seen her reviews in different platform she most be a genius then..
My dad retired at 67 with $160k in his 401K in PA. He had zero debt. He was able to live off just social security and didn't start tapping into his 401K until the law said he had to. He's now 82. He uses SS to pay his bills and the 401K withdraws for his bus trips. Take-home message....no debt!
So, he retired in 2009 and was probably freaking out about how his 401k had dropped during the great recession. I’m glad he’s doing okay, but it also sounds like he isn’t living the grand retirement that people are hoping for.
I do taxes for low income folks, many who are just living on SS and/or disability benefits. They are not thriving.
Depends on what is meant by thriving. If you have pretty simple pleasures, life doesn't have to be all that expensive. Especially in PA... I mean, outside of the cities there are some beautiful and cheap places to live out there, with some lovely scenery to keep you occupied.
If you are jet setting, and not buying the latest iPhone and laptop every year, and have a working car and paid off home... Books, parks, TV, board games, coffee and meals with friends. You can have a great life on the cheap if you want to. Just a question of if you have a personality that allows for that.
@@CaedenV I would agree with you solely because those would be things in your control. But medical/healthcare costs will eat into that savings in no time unfortunately
@@0Pain0Gain Have you not heard of Medicare?
@@shawnbrennan7526 OP said his dad retired at 67 with $160K balance (which you have done the math and figured it was 2009). OP also said his dad didn't need to tap his 401K until Required Minimum Distribution age kicked in (which we can fairly assumed if he didn't have to withdraw it until forced by the RMD law, then he probably didn't spend it and just put it back in the market via a standard brokerage account). So, if he didn't touch the $160K since 2009, it is worth $1.2M today with years of bull market run-up and OP said his dad has no debt. An 82 year old that manages his budget with over $1M to his name is kind of thriving by all measures of retirement statistics shown by this video. Is the guy popping bottles of the finest vintage on his private boat off the coast of Maui? Probably not, but he can say he doesn't and hasn't had to sell his time for money for the past 15 years (full financial independence) and still has a Million bucks to his name and sleeps well at night knowing creditors won't call him (keeping his dignity). He is kind of thriving.
The problem we have is because Most people always taught that " you only need a good job to become rich". These billionaires are operating on a whole other playbook that many don't even know exists.
Things appear right now. The value of the US dollar is declining due to inflation, but it is increasing in comparison to other currencies and commodities such as gold and real estate. People are flocking to the dollar because they believe it is safer. I'm worried that rising inflation will cause my $420,000 in retirement funds to lose value. What else could we do with our money?
Personally, I would say have a mentor. Not sure where you will get an experienced one, but if your knowledge of the market is limited, it seems like a good bet.
Yes To be honest, investing is a smart way of securing your family future, grow wealth and beat inflation
Everyone needs more than their salary to be financially stable. Investing it with a reliable source is the best
Having an Investment advser is the best way to go about the market right now, especially for near-retirees, I've been in touch with a coach for a year now mostly because I lack the depth knowledge and mental fortitude to deal with these recurring market conditions, I nettd over $320K in profits so far, Its clear there's more to the market that we avg joes don't know that Investment advisors know.
Dang there are so many robots in the comments.
And they aren’t hard to pick… it amazes me YT doesn’t stop them.
Those bots suggesting advisors seem to be the majority in every financial youtube post.
The wealthiest is not the one who has the most. It is the one who needs the least.
💯 I see the question ‘how much money do I need to retire’. The answer is, ‘it depends on what your spending habits are’.
I won't give a dollar amount but as a retiree, the expense that worries me the most is medical.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
@ErinMoriarity
I retired from a 40 year teaching career at age 70 to care for a new granddaughter. At the time I had saved a mere $135,000, but had pensions from two states. I was a single mom with four kids. Now at age 81, living off the grid in a paid off house, I've managed to accumulate a total of $350,000 in savings and investments. Note that under certain circumstances one can still increase income during retirement while not working!
That's excellent! Kudos! That's what I want when I'm retired, for my savings and investments to keep appreciating, so I feel worry free (at least finanacially speaking).
Great job. You are a strong women.
Pensions count for a lot. Every $40k annually in pension is worth a million in a 401k.
why
That's awesome! good job.
From $37K to $45K that's the minimum range of profit return every week I thinks it's not a bad one for me, now I have enough to pay bills and take care of my family.
I would really love to know how much work you did put in to get to this stage.
Please how do I go about it
I'm still a newbie on investment trading and how can I make profits.
All thanks to FLORA WOOD
She is the lady that changed my life for good
She's a verified member on Te Le Gram
Great video, Erin. One major factor that helps moderate income retirees nowadays is working part time or having a side hustle. In 2024, people of retirement age are the fastest growing workforce in the U. S. That's the new retirement model for a lot of people.
ErinMoriarity
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
No debt. 5% withdrawal rate on 500k with social security. That’s enough.
My husband is 74 and is still working because he loves his job.
Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My parents both spent same number of years in the civil service, but my mom was investing through a wealth manager, and my dad through the 401k.
This is true. I'm in my mid 50's now. My wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with her profits over the years, but at least I earn more. I'm making money even before retiring, and my retirement fund has grown way more than it would have with just the 401(k). Haha.
Its 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 $287k passively 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.
Please pardon me, who guides you on the process of it all?
Her name is “VIVIAN CAROL GIOIA” can't divulge much. Most likely, the internet should have her basic info, you can research if you like
I find this informative, curiously explored Vivian on the web, spotted her consulting page, and was able to schedule a call session with her, she shows quite a great deal of expertise from her resume.. very much appreciated
The only thing that needs to change for Social Security is to eliminate the income tax cap of $168,600. Tax all income and social security will EXPLODE!
100%...The year I am able to claim early retirement, the ssa will be insolvent. That is why you need to prepare for no help from the government when planning your retirement.
@@michaellee4900 Agree. By design, at most SS is to provide 40% of your retirement income. The rest has to come from your savings, investments, and other financial vehicles.
@@michaellee4900 Concur... I wish they would do away with SS, let me take those funds and invest them on my own. At age 61 I think I’m OK, the govt will do something at the last minute to save SSA. But I so much do not want to rely on them, I would much rather rely on the market. Let Me determine My future.
I am glad you addressed this topic. Thanks for all the great information.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME
I'm 61. I have a bit over 2 million saved. Just retired this May. I think I'm in good shape since my financial advisor wants me to take more money than I can spend.
Having my zero debt is what made me feel comfortable.
This is to get in front of RMDs. Listen to his advice
Some food for thought…My plan had always been to retire at 62 but I’m currently 66 and still working full-time. 4 years ago, unbelievably, both of my parents got diagnosed with dementia.
They had to go to a memory care facility, and here where I live, California, we are paying $12k per person per month, so $24k a month total. The cheapest place we found was $16k per month, for both of them, for full time live-in dementia care but my parents had the money so we put them in the more deluxe $24k per month accommodations but if you consider $8K a month is going to be the minimum you need for a single person’s decent full-time memory care for dementia, which is not covered by Medicare, and if you didn’t have the foresight to buy a long term health care plan to fund it, you will have to deplete all your assets and then go to a state run facility, which is not fit for a dog - believe me I visited. I get it that this is a worst case scenario, but I am living it and it really got me thinking that what if this happens to me? After all both my parents have dementia (as did my grandparents) so there’s probably a decent chance this will happen to me and if it does, the burden of some of this cost will fall to my children, which I would never want to see happen. It is because of this, I don’t feel I can ever retire. I will continue to work as long as I am able just to minimize the potential financial burden to my children. The only solution is if you get a dementia diagnosis you pretty much have to kill yourself before you’re too demented to know how.😢
In my parents case we have already spent over $1M on their long-term dementia care. None of you You Tube financial gurus talk about this reality. So agreed, you don’t need 1M to retire. You probably need at least 2M. You say you are the person who asks the “what if“ questions but you missed a very obvious one!
The end statement is the only thing that needs to be said in this video. If you save 10-20% when you are young, you will EASILY be able to retire with a seven figure nest egg. Americans go through so much effort to make money and so little effort to save any of it. Once you get your first "adult" job, live within your income and don't buy anything on credit except a modest reliable car. Cars and consumer debt are a sucking black hole. Once you are living within your means, then every pay raise you get on your job, save HALF of that raise and use the other half to slowly improve your standard of living. It's a dead simple formula.
I retired in late 2022 at the age of 70 and am doing just fine. My home was paid for and I didn't have any debt. I have about $550,000 in savings, IRAs, and a brokerage account.
If you did this all with no pension, you done well.
Spend the brokerage money first! If you get sued, that brokerage money is gone!
What? I'm 38 and have more than triple that and am no where near being able to retire.
@@InfiniteQuest86 WOW we are beyond impressed! Do you know the meaning of TOOL!
@@InfiniteQuest86 move to the congo and you can retire - or burkina faso.
Good video. It hits all the right spots.
To determine our income need in retirement, we used our expenditures. We divided them between recurring, non-recurrimg, discretionary, and excess. We baselined the recurring and non-recurring on a monthly and yearly basis to establish minimum income need. The discretionary represented our safety margin and excess income, our legacy or bucket 🪣 list. Our baseline expenditure burn rate is 42% of our retirement income. So, we have a safety margin and excess income.
After years in retirement, our expenses have gone down in relation to our Pre-retirement and early retirement estimates. We still have a 2.5% mortgage that could be paid off at any time from our investments but chose not to. Questions?
Great insights! thank you!
It's really hard to find videos that discuss retirement like this. Thanks Erin!
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
I don't know if this is a joke or not but if it is true, then that's the American dream come true for him. Same here. I am 53 and retired at 50. One thing I did do to retire early was to get out of the 401K and IRA programs. Bought rental real estate and I am now a Limited Partner in about 3500+ units. I do not work.
I only contribute 5% to get the full company match, that’s it. The 401K plan is designed for you to work until you are about dead. Also, the government does not have their hands on it yet either.
My wife and I live off of our 401K. We don't work. I recommend highly to everyone to build your 401K or Roth IRA's as an alternate revenue stream in retirement to your Social Security.
An observation on 401Ks is when it gets over 300K it starts to accelerate. When you get over 500K it can really accelerate as the stock market grows.
If I may ask, as in withdrew all of the money from the 401K and IRA programs? If so, what was your strategy behind that decision? Thank you.
I learned about government actions from Desiree Ruth Hoffman. Ms. Hoffman explained the benefits of long-term Treasuries and alternative investments, which the government doesn't disclose.
Great information. Thanks Erin
I realized that the key to becoming a millionaire is to make better investments. I bought my first home at 21 for 87k and sold it for 197k, my second home for 170k and sold it for 320k, and my third for 300k and sold it for 589k. The buyers paid all closing costs and expenses, etc. Making less than a million dollars before retirement means an unfulfilled retirement!!
I'm looking into different investment opportunities and would appreciate others' thoughts on the subject.
My CFA,
"becky
lou
gordon,"
she a well-known figure in her field. I recommend doing more research on her credentials. She has extensive experience and is an invaluable resource for anyone.
thank you!!
The buyers paying all closing costs and expenses, is usually how it works.
Imagine if you had bought and held all those homes.
Hey Erin! Thank you so much for this video. I have been watching to see a video like this for a very long time.
Glad it was helpful!
Yes it was. I’ve been stressing over the notion that we have to retire as millionaires to make it during retirement.
I can’t see myself fully retiring. I think I’d get bored quick lol.
Erin you rocked it on this one. Ive been watching all these financial videos. And ive had a huge problem with people giving ideal life situations and thinking it applies to others. Their whole shtick is sacrifice now so your olderself can thank you. So they go out and scare people to thinking if you dont have millions then you are behind. Saying if you sacrifice now you can live it up later. Scaring people with statistics and stories worthy of alec Baldwin glen gary ross. Im in no position to tell people how to spend their money. But these videos should be a reminder telling people its not hard to take control of your finances. But to think you can come back to your 20s in your 60s is crazy. Interest rates will probably never be 2.5 percent again. So if a person missed on that they cant get it back. I used these videos to keep me on track and if i get behind im okay with that. I know how to get ahead thanks erin, money guys, smart money bro, and white board finance.
Joe Kuhn and ESI money are good resources, too
I just told my prospective financial advisor this morning: "$1M is my goal."
my dad retired at 62 took social security and had 200k in a retirement account. He also had a paid for house and no debt. He retired comfortably. He didn't travel the world and go on vacations.
I agree with you completely. The amount of money you will need in retirement has nothing to do with your income. I made two budgets. One includes the necessities only and the other includes the necessities and all the extras I would like to do, like travel, shopping, hobbies, etc. That gave me a spread. When I retire, I will be somewhere in-between. I will be able to do all the things I wanted, but not as often as I originally planned. I can live with that.
Nice De Beers analogy 😊
thank you
Good info, well presented. Thanks for sharing this with us.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
@ErinMoriarity
All the best and good video. In my opinion it is still a good time to invest in different stocks like gold, silver and digital currencies. This is one of the most important skills to learn and everyone should invest instead of saving. Some may agree, some may disagree. My big compliments to Natalie Rose Strayer for improving my portfolio!!....
I'm surprised that you just mentioned Natalie Strayer here also Didn’t know she has been good to so many people too this is wonderful, i'm in my fifth trade with her and it has been super.
The very first time we tried, we invested $2000 and after a week, we received $9500. That really helped us a lot to pay up our bills.
Natalie Strayer has really set the standard for others to follow, we love her here in Canada 🇨🇦 as she has been really helpful and changed lots of life's
This sounds so good and I would like to be a party to it, is there any way I can speak with her?
After I raised up to 125k trading with her I bought a new House and a car here in the states also paid for my son's surgery
Glory to God shalom.
Thankfully I do have over $1m saved, and a pension (Gen Xer).
well done.
Wow, thank you for this video. Opened my eyes to so much. Subscribed.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
@ErinMoriarity
Just got 500k. Thank you for all the knowledge and nuggets you've thrown my way over the past months. Started with 55k last month 2024
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
@ErinMoriarity
We are dividend investors and have a goal of earning 15% more in dividends than our current salaries.. we are on pace to hit that in7 years
Well done!
@@JBoy340a 🤜🤛
But how are the 80 year olds doing financially? Anyone can retire for a couple years and be okay. Lasting 30 years is another ballgame.
That's the game I am in at the moment i.e. I retired last week at the age of sixty one with the numbers saying I can coast for five years on what I have prepared. But beyond that I will need to look at either hopping back into work (and probably sooner rather than later so as to not find the door permanently closed) or selling the house and spending my last days in a foreign land.
My Dad just passed in February at 99 years old. He retired in 1980 with a pension of $1400 a month, which never changed during rhe 44 years. His SS when he passed was about $1900 a month, or around $1400 after medicare and Supplemental deducted. He ritired with no 401k, but had probably around $200,000 in savings, mostly cd's and money markets, but a couple stocks also. His savings grew during retirement, even with paying 3 years of nursing home costs for my Mom at rhe end of her life. So, can you live comfortably with low savings, yes. It depends on your spending habits. He took at least 2 trips each year, one to my Mom's family reunion, and one to his Navy reunion in various states. He also took various trips to visit out of state kids.
@@dallassukerkin6878 Retirement is whatever YOU want to do with your life. But also looking ahead, 5 years you will be 66 and have the chance to have Medicare and Social Security to fill in some gaps you might have now. Another thing to think about is the older you get, what physical health might you be in? Take your trips and do the things while you can, these are your Go-Go years. When you are 80, you won't want to really go anywhere (No-Go years).
@@heatherlw13 That line of thinking is what prompted me, aye. I am not infirm yet but I can feel the years starting to get their claws out!
@@jdgolf499 $200k in 1980 would be like 800k today at nominal inflation rates of around 3%. But inflation in recent years has been in excess of 100%.
Thanks, very good as usual.
Another thoughtful video. So much of the retirement talk is polls about savings numbers rather than the most important question: what is your budget for retirement, and how will you main the necessary cash flow?
It has been a while since we talked. Sorry that chanel didn't get traction. Still very comfortable in retirement. Actually, I have more than I retired with. Greetings from portugal
Thanks for pointing out that everyone's circumstances are different. Some people have a large family to support and medical issues that use a lot of money. Others are single with paid off home and no responsibilities. It is hard to have a specific number or percentage that works for everyone.
I disagree. We probably need more than $1 million + to retire. One of the biggest problems is people are counting on the Social Security Medicare benefits to retire. However, the US government is racking up debts massively as of late. Those benefits will either be cut or monetization of debt will result in higher inflation that erodes the value of those benefits.
I agree. Start saving while you are young and let the compound interest do its thing. This video will not age well, we will see a lot of people in the next decade suffering because they have no nest egg. I see a lot of comments from people who say "I'm living on $30k a year and I take two vacations". My widowed 88 year old father would be in big trouble if we did not help him out with many of his bills.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME…
ErinMoriarity
So much of the FIRE content is consumed by people in their 20's and 30's. I can imagine it being really discouraging if you are older and less able to capitalize on compounding. What a great video to put into the mix! Never too late to start.
Thank you!!!
I started what turned out to be a FIRE plan at age 41 with nothing but a very old car. Age 60 now with multiple properties free and clear and enough to live on indefinitely even without SS. Acquiring a frugal mindset was a big key that shifted things for me, as was leveraging my unique skill sets to the max. Age should not stop one!
Many factors to consider. Amount of debt and how to pay for healthcare if you retire before 65. It's really about much time before you retire, portfolio allocation and how much you need monthly in retirement. My wife and I are 51 and our portfolio is 59% in stocks, 16% in bonds, 8.5% in fixed annuity, 7% in CD and 8.8% in cash. 59 1/2 is the target and with an average market return between now and then, it should happen. We are debt free and max out 401Ks. If you don't have a planner and feel overwhelmed, it might be worth your time and money to sit down with a CFP and talk about your options so that you have a clear path forward.
This is totally dependent on where you live and what your situation is. I'm 59 years old and have two young children of 5 and 8 years old. Based on our current spending and the 4% rule I would need more than $4 million to retire assuming taxes would zero... If you have any significant amount of assets apart from your house here in Australia you will not get any social security type income from the government so you will depend entirely on my own investments. If I retire next year or in 5 years, my spending is not going to be going down. So do your own calculations based on your situation is.
The question of "how much do I need in retirement?" is the most anxious one in retirement finance. That's in part due to the fact that it's tangled up with our mortality, as we need to finance the amount of time we have left to live after retirement, and of course that's naturally uncertain. And also implicated in our genuine concerns as to living a life with dignity in our later years, not depending on family for support, or assuming that social security (or in my case, the Canada Pension Plan and Old Age Security, the two public foundations of retirement here) are sufficient to our needs.
The benefit of the 1 million dollar figure is that, given that there are such divergent views and data around the question of "how much do I need?", it represents a clear and compelling number. It may be unrealistic, it may be more than we need, or inadequate to what we require--much depends on the individual's situation, where and how they live, inflation, etc. But I doubt the appeal of the 1 million dollar standard will ever disappear because that seventh digit has a kind of charisma about it, irrespective of its actual value in determining whether we have enough or not.
Great points regarding who has been telling us what we need to buy and how much we need to have saved before we retire.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
@ErinMoriarity
Well said, retirement is going to come sooner than everyone thinks. It is just best to do your best.
Another excellent video Erin. I love how you do a deep dive into the data and thoroughly analyze all of the opinions in the articles you discuss. As I have mentioned in comments many times before, I retired at the end of 2021 at the age of 65.5. I worked 30 years for a Fortune 500 insurance company and was lucky enough to get grandfathered for excellent retirement benefits. I get retiree health insurance; retiree life insurance and I had a defined benefits pension. In addition, my company had a 401k that they matched up to 6% of your salary. In 2016, they froze the pension but I got grandfathered so my pension benefits continued; however, as a trade off they increased the 401k match to 9%. I was also able to get the 9% match. My wife passed away 3 months before I retired, so that changed my plans regarding the pension. Instead of taking a monthly pension payment, I decided to take it as a lump sum. My lump sum payment was over $1 million. I rolled it into an IRA and didn’t touch it during my first 2 years of retirement. When the interest rates went up in 2022 and 2023, I decided to create my own pension so to speak by buying an immediate annuity. I have it set to pay me monthly for the rest of my life with 20 years guaranteed. My monthly payment is about $7,000. In addition, I am collecting my wife’s social security as a survivor benefit. This is about $3600 a month. After the Medicare Part B premium is taken out, I net around $3300 a month. I plan on letting my social security benefit grow until I am 70 in two years and then switch to mine. Not only is the annuity payment and social security enough to live on, I am saving about $1500 to $2000 a month. I currently have 2 years worth of expenses covered in my emergency funds which I keep in high yield online savings accounts and a money market account. I also have about $5,000,000 in an IRA which is actively managed by a brokerage firm and about $1,000,000 in a non qualified actively managed Index fund with Fidelity. I switched to an actively managed account to be able to harvest losses for tax purposes. To get back to your point, you don’t need a million dollars to retire. I have well over that amount but I will never touch any of it in my lifetime. I have an estate plan where it will all go to the Humane Society as I have no relatives that I want to give it to and I like animals much more than humans. Thanks again Erin for creating and maintaining this excellent channel.
Nope, respectfully disagree. To retire without worry, afford decent medical protection, cover increasing expenses due to inflation and contingent plan if the government safety net of SS gives way....yes, $1M plus is needed. I'm 67, recently retired and am experiencing this right now. Of course you can (if you have to) retire with $500K in reserves over SS benefits, but from my perspective, living/home/transportation upkeep will erode that quickly. I draw close to $3700/mo in SS, and see an outflow of over $700 a month on medical insurance payments and medication. With a paid-off 40 year old home, I have still budget for taxes/insurance/repairs appliance/cooling/heating breakdowns and general maintenance. Other general expenses run about $2K a month. Those are expenses TODAY. I use 5% divys from $750K of T-bills to supplement SS. The T-Bill income gives me (after taxes) @$2K/mo. of buffer. If you can believe reports from the Govt, SS is expected to erode by @ 2030. Because of that I have another $750K in equities I'm trying to grow as a stop-gap. I'm assuming I'll stay alive another 10-15 years, so I have to factor inflation of food/healthcare/energy/housing expenses, plus additional for assisted care expenses as I age. I don't want to accelerate my own demise by living under stress that I'll run out of money before I die. I'm thinking you'd want to live like this, too.
Excellent breakdown, and a good reality check.
I know people scrape by on much less, but I’m often shocked at how people think they are going to live and travel in luxury on $10k per month.
I have a paid off home add no other debt, and I have nowhere near the expenses that you have. I live in a Southern state.
@@kburkes4245 Exactly! $5k a month with NO DEBT in a state like SC goes a long way.
It sounds like you live in an expensive house, therefore have real estate taxes, and maintenance. Your SS is $3700 that means you are high income, average SS is below $2k. What you speak of most people don’t have, like central AC. Most people don’t live like you. I certainly don’t.
I concur. I retired early and that does increase expenses vs waiting until 65 but I'm glad I'm a millionaire (barely), I can take out 5% of my IRA without worry of drawing down my balance much or at all and have plenty of money for expenses and some fun, plus I have plenty of cash to take care of emergencies. The numbers she's throwing out in this video are scary, no way I would have ever considered retiring with so little.
This is a very good video! This might be the first video I have seen talking about retirement that makes economic sense. Retirement is a lot more affordable when you have no debt! Having no house payment and no car payment, no student loan payments, no revolving debt payments, etc makes retiring fairly simple. This girl gets it.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME…
ErinMoriarity
One thing I don’t see many financial advisers talk about is the cost of healthcare you need to spend for insurance before 65. That is going to be a big number if you have any ongoing healthcare needs. Many do. Consider ongoing conditions cost if you have diabetes, heart disease or many other common costly healthcare needs.
Your retirement success is heavily dependent on your debt, expenses and your investments. If you have a home paid off and no credit card, auto debt, personal loans it is a big advantage in retirement. Keeping your monthly expenses low will optimize your success also. For example, my home is paid off so I pay property tax $4500/year home insurance $1130/year. Total $5630 divided by 12 = $469/month to live in my home. Where in the USA can you live for $469/month?
I keep my expenses to 13 items. 1. Electric 2. Natural gas 3 water/sewage 4. trash/recycling. 5.internet 6. cell phone. 7. auto insurance 8. home insurance 9. property tax 10. gasoline 11. auto/home repair budget 12. entertainment budget. 13. Food No subscriptions, no pets, no cable TV. I can cover all of these for $2200/month. I do not have $1 million.
I agree with everything you are doing, except maybe a pet would do you good. 😊
I admire your frugality. That is below the lifestyle I want to live in retirement. You are 100% correct.
@@sct4040 I had a pet in the past but I'm allergic to pet dander. My neighbors have pets which is good enough for me.
There are lots of places in US where one can live on less than $500 a month. Not in a huge house but a modest one. It would cost me more to live in 3rd world country than here, and with a lower standard of living---why do you think they are all trying to move here?
@@keralee People are coming to America illegally so that Biden can give free housing, free medical, food stamps, free cell phones, $10,000 credit card, tax breaks, and they vote for the people handing out free shit.
I just take money out as I need it. No 4% rule. Great video as usual. You are very knowledgeable and present your videos very well
Saving goals are a little harder with saving for my childern's collage (state school). It is a savings goad (using a 529 plan) in addition to saving for retirement. It is not that I have to do it... it is that I choose to.
Good morning Erin; I always like starting my week out with one of your videos. Another great video and discussion Erin. I'm with you and as you described yourself at the end - you are I are cut from the same cloth. I agree with your comments about the current generaton of retirees and how the future is different in many ways. I think it would be a mistake basing any of the fringe retirement plan approaches when it would be based in jello and not firm footing. There are too many potential changes hanging out there. People need to know what they want their retirement to look like, educate themselves and give the topic of their planning a lot of thought. You can't establish a plan if you don't have any feel for what your expenses will be or an income estimate and the sources. Taking action the sooner the better, start consistantly saving and investing (always be buying), and time in the market ... and let the power of compound interest do it's magic. Larry, Central Valley, Ca.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
@ErinMoriarity
Current retirees have pensions. The last cohort for that to be the majority.
Based on the fact that there isn’t a huge population of retirees living on the street, and that very few retirees actually have $1M, we know that $1M is just a vanity figure.
Yea I dont think retired people with not enough money just lose all their possessions and become homeless. So finding retired people living on the street would be many steps after finding out they didn't have enough to retire on.
Far more likely "not having enough in retirement" will manifest in the person needing to be very cheap in retirement, needing to go back to work or relying on family members for assistance. I bet there's all sorts of retired folks that have to do one of those three, and maybe don't have enough in retirement.
More like a insurance policy. One that pays out if you don't use it.
True. They just become un-retired, move in with family, get a roommate, depend on assistance programs, lower their quality of life or expectations, etc. Being alive and living are different things.
Unfortunately, there is a growing number of people living on the street who are of retirement age.
There are adult "halfway homes" so sure, you don't technically see them on the street!
One thing people should brace themselves for is social security changes. In 6 years SS checks will be cut by 25%. Most of that will be taxed, then take out medicare and your left with less than half of the number you see currently on the ss website. If your future SS payment is listed as 1600 you can expect to only get about 800 per month to spend.
Very unlikely those currently on SS will see anything like that. I remember the last time all the dire predictions. Those on SS didn't see 1 penny of reductions, except maybe tax if they had high pensions. Likely as she said, a rise in age of eligibility and caps. Maybe higher payroll tax. Maybe new enrollees have lower payments. Younger people need to be better than boomers at saving for the future.
Life style and debt or lack there of are a big facter. Knowing what you spend typically is good starting place.
I need 1.65mil in today's dollars in order to retire and live the lifestyle I want.
I wonder how many of these retirees are comfortably retired. Take a trip to the local grocery store and I see many seniors working at the till. Walk into a dollar store and I see retirees or single parents with multiple kids as their main customers. When I did community nursing work, an alarming number of seniors have their fridges filled with cheap, low nutrition foods like hot dogs, white bread, and canned soup. These retirees are living in poverty out of necessity.
Agreed, I need about that amount too and I have a pension. Especially in todays environment with inflation out of control
"Out of necessity" is a strong leap. If retirees are still working, it could well be because they're otherwise sitting on a couch all day watching tv, and they know that's extremely dangerous. Basically a guaranteed premature death.
Regarding their fridges, maybe that's what they grew up on and they're happy with it? Maybe it's simple and they don't want to have to cook?
I'm not saying you're wrong -- in fact, I suspect you're right in a lot of cases, but we can't just lump everybody who exhibits certain behaviors into the poverty bucket.
My Grandpa started eating like that near the end because he liked those foods and felt like “wheat bread” wasn’t going to prolong his life nice for the taste switch.
@@bvoyelr Good points. I can't speak to the people who are working. Perhaps they just want something to do. I volunteer for the same reason.
Regarding the people I saw in their homes, I actually do have insight into their finances because I need to know that to calculate their government-determined cost. I'd say 80% of them receive free care because their income from all sources is below $10,250/year (in Canada). It's hard to make ends meet on that income without family support or cutting costs. The assessments we do are comprehensive... from education, ancestry, health, family, finances, hobbies etc. We ask whether they need to choose between health care and rent/food. There's not much left to assume. Also, this isn't a regional issue as I live in one of Canada's retirement capitals and we have people from all over the country here. I do recognize that people who are wealthy may never require our support so perhaps I don't meet them... that's the best case scenario. The point I'm trying to make is that just because someone retired with a small nest egg and is managing to stay alive, doesn't mean that's enough.
@@dantheman6607 If you are real, Inflation has been a part of the world for thousands of years
You don't need $1 million. You need $2 million!
Actually closer to $2.5 minimum. Closer to $3.5 million to retire to be comfortable.
I know people that retired with plenty of money and those that retired with little and those that retired with plenty are definitely living better lives, free of money worries, able to do whatever they want. Those that retired with little end up having no money to travel or do other fun things and unexpected emergency expenses cause them great anxiety. Which category would you rather be in?
1 million would last me 33 years. Right now I pay $1,300 a month for 4 bedrooms 2 living rooms in the Midwest, small town.
No pension just IRA, savings, part time work, social security, and everything is paid off.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME
ErinMoriarity
I retired to the Philippines at 51. My wife and I already owned property, worth USD1M, which we bought while we lived in HK. We have an income, from our business interests and property, of around USD 40, 000 p.a., plus investments. We have full family healthcare insurance plus educational plans for the kids. We are doing just fine. Our income far exceeds our expenditure. We won't go hungry, nor will the kids.
Absolutely agree it’s all about expenses in retirement, this can have a huge variation. Some folks are so happy with a very simplified retirement life and therefore minimal overall life cost. There may be other couples who want to do extensive travels or dive deep into expensive hobbies. It’s all about running the numbers, laying out your retirement budget, plot against a Monte Carlo assessment of savings and it will let you know. Don’t rely on ‘rule of thumbs’ they are fundamentally flawed.
Thanks for covering this very important topic Erin! I try to estimate what income I will need per year in retirement and estimate 4% retirement per year on investments/savings.
I think it all depends on WHEN you want to retire. The earlier you wish to retire, the more money you will need. Also, you have to assume you are going to live a longer life than you think due to medical advances.
A huge percentage of retirees didn't get to choose when they retired, they were let go or downsized or got sick. Better to save more than you think you'll need, in case you get "retired" early...
@@dstevens518 for sure, there's no telling what AI will do to disrupt or enhance existing jobs (we'll have to wait and see how it plays out). But, better to save more and not need it than to need it and not have enough, it is the better of two problems.
Thanks for this take on blanket retirement statements for everyone. If I had to wait until I reached 10x my annual income, I would never retire. Luckily, after figuring out my living expenses, I found that with SS delayed until 69 or 70, and a couple of hundred grand in CDs, plus my relatively small, as of yet, 401k, I can retire in decent comfort.
One thing I am looking at is enjoying a gradual transition over the next few years into retirement by cutting my hours at work; my company allows this, so why not? I can get a taste of retirement while still having outside money coming in.
BTW, I will be 65 later this year and I’m putting away 27% of my pay, including the 6% match my company provides.
Please retire ASAP and enjoy time to travel. Life is too short, take your SS at 65, please don't wait, no one knows tomorrow. You cannot buy back time, you can make more money, what happens if the health is so bad you can't do anything. Just a thought.
@@johnsonajayi7846I appreciate your advice. One thing I neglected to mention earlier was that I will reassess things each year to see how I feel. I know tomorrow is not guaranteed for any of us and that I may be making a mistake by waiting, but I will take full responsibility for my actions and not blame others if I choose wrongly. I am, after all, a man.
At the very least I’m going to try to wait until FRA.
sounds great - if you have measured twice/thrice ... cut the work!!! Enjoy. I've found i might have lasted on the job a few years too long, but i had family problems to address (that only money could provide ... sigh) so i retired at 68 ---- while i have no regrets -- reality!! -- still at 73 it woul have been good to have a plan to retire at 65. Good Luck!!
For us my threshold is 600K in investable retirement assets. 24K a year will bridge to Social Security between 62 -67, then SS will round out expenses for life with remaining investments as emergency fund, longevity insurance and splurge purchases. Luckily I am a Federal employee and retired military so the combined pensions will take care of the rest. 26 years of active duty helped secure my senior years, two more years in the workforce to go (at 615k now)
The idea of retirement is vague. What people need to ask themselves is: What percentage of your current income will you need in retirement? Some people want to be frugal and go to 50% and some want a fat retirement where they do whatever they want and go 150%. This makes the retirement question much simpler to analyze.
I want to see the bloopers
If you own a home outright, your children are financially independent & your car is reasonably new, you don't need much income if you're 65+.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME…
Thank you for the good discussion, as always! The piece that gives me the most pause is the uncertainty of health care and/or assisted living. Even with $1M+, those unpredictable expenses can quickly change your financial situation. How do you account for that variability in your savings goals?
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME
@ErinMoriarity
Convincing my 17y/o that Roth IRA investing in a low tax bracket is more challenging that investing in my own accounts. If you have kids, teach em.
Yes, my daughter is now 32 and still says "she's going to do it". Wish I could convince her.
It never occurred to me that those recommendations are a potential conflict of interest. That's interesting. So, they might be suggesting higher than necessary balances. Which...
...which means I'm off to the Ferrari Rolex store! What time is it at 100 mph? I'll tell you in 6.2 seconds.
Great stuff as always, Erin. Super interesting one.
😂
Actually, the financial advisors are not lying. They simply assume same level or more of spending, same cost of living, as well as inflation and conservatively projected (read rather expensive) medical insurance expenses.
@ericchang7759 I'm very sure they're not lying. But I needed a jumping-off point for the Ferrari Rolex store comment...
Sorry, missed the humor/perspective. Recently I’ve been reevaluating my financial needs for retirement and came to the same conclusion as Erin, just put a different way. This video really made me start looking at setting up a lower cost of living to set myself up for the next 30-35 years. I’m thinking of getting into aviation (holding off on Ferrari/Rolex) 😉
It seems to me based on my experience in retirement that 10x income if you plan on retiring at 67 is too low.
I’ve heard an equation that makes sense, albeit conservative: take the amount you think you will need to spend every year and multiply that by 25 years.
@@4mmorrisfamily that's the 25xexpenses or 4% retiremennt withdrawal rate...
The fidelity algoriithm is based on the 10x rule replacinng 45% of your income (the chart #4:34 shows this) ---- since SS is supposed to replace 40% of your income, that is the 95% replacement rate ---- if you think you're going to need more than what you earned during your working years, then you'll have to have more streams of income or your portfolio will have to be increased as you said - does the chart higher % meet your expectations?
@@kevinkanter2537I don’t believe SS will ever replace 40% of your income if you made a 6 figure income. I retired early and my savings rate was about 27% due to an extremely generous 401k match. I have about 25x peak earnings invested and a house worth 10x peak earnings. No debt. A 1 million buffer in my plan. My standard of living is the same as when I was working. I think people who have pensions can retire without a lot of savings. I would be very worried for people that only have 700k planning on retiring at 67 without a pension.
That Fidelity chart on multiples of income is the simplified one. The more you earn the lower percentage soc. Sec. Replaces. High earners need 12-14 times annual income saved.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
@ErinMoriarity
OMG thank you so much for this video. I made a comment to an older video you posted a while back, saying that the "rules of thumb" just break down at some point, and that it sure seemed that Fidelity wanted you to work until you die, always trying to scare people into saving every last penny and investing it with...Fidelity. $1M is a boatload of cash. $6M at age 55 is a ludicrous amount, yet they say that if you want to maintain your lifestyle you need more more more. I ain't flying into Monaco and playing Baccarat with James Bond here, I'm just trying to freaking retire like a normal person! I'm pretty sure I can retire and not be eating beans out of a can in 20 years, as Fidelity would have you believe.
2 month salary for a shiny rock. LOL I'm at 10.5 times of my working income at 59 and a half years old. this makes me feel good about retirement, but I have not enjoyed my life. balance people, balance!!!!!!!!!!!!!!!!
You are me!
There's a lot to be said for being goal-oriented!
What you typed will be me in 4.5 years. I just need to stay employed for that period lol.
@@valdivia1234567 don't forget to enjoy life now. like I did
I was so hoping and waiting for you to say the amount you needed is based on EXPENSES and not income. Once I realized that I knew I could retire at 52. That was 7+ years ago. I never lived to keep up with the Jones'.
I don't have a million dollars and I am VERY comfortable in retirement. Lots of cruises ;) Sent you a message and didn't hear back. Hope all is ok.
A nice big pension makes retiring at your age more obtainable for a lot of people.
I am a 54-year old burnt-out engineer with $400K in declining investments, planning retirement soon. Seeking best stock strategies for market downturns and hyperinflation.
Yes, you don’t need $1mm to retire as if you don’t have a pension then you need much more than $1mm. People need to live within their means and everyone doesn’t need a BMW, etc.. They should save and be responsible for themselves for retirement. You are correct that the 4% rule is dumb though.
Your talking about retired ppl getting a pension, and ssi and everything else, your not talking about the 20 something in 40yrs there is no more ssi and pensions are starting to be a thing of the past
You have 40 years to compound your money and have multiple ways to have it sheltered from future taxes (ROTH 401K, ROTH IRA, HSA). That's powerful stuff that many Boomers didn't have. Some pensions don't even adjust for COLA (cost of living adjustment), so your purchasing power shrinks each year. When you die with a pension, there is nothing owed to you and you can't pass on the wealth to your beneficiaries. There's no way to create generational wealth with pensions or social security. However, if you invest 40 years into ROTH accounts and not forced to take required minimum distributions in a ROTH, then that money will compound for many years to come and it gets passed down when you are gone.
How about a survey that isolates 75-85 yr olds who have been retired for a min of 10 yrs and their account balances and how they feel about it? Let's talk to those who 'have been there, done that!"
That is my Dad. Just passed in February at 99. Retired in 1980 with a $1400 a month pension and when he passed, his SS was about $1900, before medicare / supplemental deductions. He probably had about $250k saved when he retired, mostly in cd's and Money markets, and a few stocks. He died with about $750k in investments, and that's after laying out about $300k in nursing home costs for my Mom from 2015 - 2018. So, those older folks are doing ok. And no, he didn't just sit at home doing nothing. He travelwd every year to my Mom's family reunion and his Navy reunion. He traveled to various states to visit his kids.
@@jdgolf499 Reassuring, thanks for sharing.
My husband has retired for 10 years, I for 2-1/2 years, our investments account have gone up since then even with RMD, and my taking my 401k. 😂 go figure.
ALWAYS overshoot your retirement income. You’ll never know what sort of debilitating physical or mental disability will take away all your assets within a short period of time. I would not want to force one of my loved ones to take care of me, while their family is short one income.
Why did waste the last 5 years???
I was about to say this is soooooo truuuuue because of how much im learning about dividend investing at the moment. im only at the start of the video but its definitely a life style choice that messes with these numbers unless you wanna live in the sticks yeah 50-100k (would still lean in on 100k) is great but if you wanted to stay in the city starting from nothing youd shoot for 250k i think personally thats what im shooting for anything above that. if i wanna shoot for it... is icing. (and by city i mean a normal city. 250k in newyork or cali will still get you no where thats when the million dollar number becomes real)
ErinMoriarity
For me the Fidelity 10x income benchmark at retirement is comforting. I had been aiming for much more. I am concerned with leaving an inheritance behind, and glad to hear that I'm on track to do exactly that.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
@ErinMoriarity
As part of my retirement plans and also owing to the very shaky housing market now, I just sold a property in Philly and I'm thinking to put the cash in stocks, I know everyone is saying its ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains in months, I'm really just confused at this point.
Yes, a good number of folks are raking in huge 6 figure gains in this downtrend, but such strategies are mostly successfully executed by folks with in depth market knowledge, And it also all depends on how long you're willing to hold for, stocks might likely tank further, but making serious gains in this downtrend wouldn't be a problem if you're a pro.
I wholeheartedly concur; I'm 60 years old, just retired, and have about $1,250,000 in non-retirement assets. Compared to the whole value of my portfolio during the last three years, I have no debt and a very little amount of money in retirement accounts. To be completely honest, the information provided by invt-advisors can only be ignored but not neglected. Simply undertake research to choose a trustworthy one.
Mind if I ask you to recommend this particular coach you using their service?
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Aileen Gertrude Tippy’’ for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
You don't need even 500k to retire most people are retiring with 200-300k in savings yeah you won't be cruising in France but for some people it's doable and last for the length of their retirement.
IM MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
@ErinMoriarity
I FIRED with less than a million, but I have multiple streams of income and low burn rate. I also moved to a low cost of living area.
With enough income, you’ll never touch the million.