Add passive income ideas to utilize to add monthly income when someone wants to retire before collecting social security. Add best ways to pull money from case studies particular asset mix such as taxable account, 401k, HSA, Roth 401K.
Totally agree with previous comment from @deerhunter7268. You changed the complete scenarial. What could have done with the original plan with the additional work.
I am a professional, 58. Been through multiple financial consultants/advisors from well established firms. These are best presentations I’ve ever received.
I think 8,000 a month for expenses is really, really high in retirement. That’s more then the average person makes a year working. I’m going by today’s Stats average personally income 63,214. Median income across the country is 44,225. WOW I was shocked at these #’s. I count my blessings everyday.
I'm pretty good at retirement planning, having studied the subject for many years. This video is level headed, comprehensive and smart advice, IMO. Great job.
It’s scary not having jobs, not seeing that direct deposits. For that reason, we drew from SS right away once we decided to retire. Psychologically, we feel better having an “income”. It took a while before realizing we had more than enough. We were not necessarily frugal minded, but we are not fancy people. We spend about $45k per year living in NYC. Once retired, your mindset changes, don’t care about stuff anymore and spending goes way down.
I'm very comfortable in Texas with the same amount; house is paid for and in a low tax area. I do travel quite a bit, at least 3 international trips per year to low cost destination; if I cut on the travel, $30K a year is sufficient.
Thank you for this post. I recently got pushed into early retirement at 55. I have some physical limitations that will make it difficult for me to get another job...but honestly, I don't think I want to work anymore. I have been pretty stressed out about the whole thing. I really appreciate seeing that you are managing on 45K in NYC. I totally agree about "not needing stuff" in retirement. Thank you for this post!
That's why every person needs to do their own assessment, with the help of a CFP. There are way too many variables. This video simply highlights how small changes can make a huge impact on your situation. It doesn't always require huge changes. Everyone has different earning ability, desires, comfort levels, etc. Don't try to insert yourself into a situation that doesn't honestly fit yours needs or desires with at least marginal wiggle room.
Love your tool that helps run scenarios. Really great, and impactful for clients, I’m sure. Have you considered other tools like SPIAs, that pay an income for life, or dividends from your investment portfolio? These would seem to only make their analysis look even better, and might be preferable to working part time from 62-70.
Yes! Do more of this with real-ish account values, perhaps including strategic Roth conversions starting around 60 years old, and seeing how future income and RMDs are affected. Very helpful. 🙌
The idea of working 2 more years and then part time is out of the question for many (including myself). The stress and consequential health issues make this a non-starter. I was hoping that you might first look at taking SS at 62 to determine if that has a chance at success.
@@gauravipal9518not necessarily true. I just talked with my advisor, and he said it’s not a crazy idea to do just that. I think a lot has to do with how you’re invested. If I can find this again, I’ll let you know how our meeting goes next month.
@@lemongavine eating out daily is probably going to help them not run out of money; they'll die sooner from all the fat and salt unless you are super careful.
Yes! Please do more videos like this. Something for mid-fifties, Roth conversions, SS, etc would be insightful. Thank you so much for sharing information that could change lives and perhaps allow people to see they may be able to look more seriously at being able to retire now!
@RootFP. Also good for those who are in 50's and were forced out of their long term job! I'm 55 and just got forced out of my job. I decided to take a sabbatical and I am quite liking it! Trying to make it work so that I don't have to go back into the work force. I agree with @lowersadventures4512!
Love this video! My wife and I retired two years ago from jobs with take home pay of $60,000/year combined, and my wife's job paid our health insurance. I knew our costs would be significantly higher than previous take home due to insurance, but am shocked at how much higher. Our needs exceed previous gross income but will drop $15,000 by the end of the year because of turning 65 and qualifying for Medicare. I did countless budgets prior to retiring and was wrong on every one. Thank god we saved 20% more than I thought we needed.
I retired at 62 and my wife and I went on Obamacare. We didn't pay any premiums for three years until a I went on medicare. We did have a high deductible plan but we loaded up our HSA to cover the deductible. We got lucky and didn't have to pay much more than what we earned in HSA investments.
IMO, healthcare is definitely the monster under the bed. Everyone's situation is different, but we are just shy of 62, and like an increasing number of couples, we had our children later in life, so we have a daughter who just started college. Which means a family health plan instead of just a couple's. Ours is currently costing my employer and I over $20,000/yr and that scares the crap out of me, so retiring before she graduates just seems crazy to me.
How were you so far off on your budget estimates? I've tracked my last 3 years of expenses and used that for my estimated financial needs with a little bit of cushion for unknown expenses like home repairs. I also considered taxes and health insurance. I guess I'm wondering if there's anything I might have missed.
The “consulting in my industry” fantasy is usually just that. And earning $20k at a crummy job will make you wish you just kept your original full time job.
I was enjoying my job, but wanted more time not working. I worked with my employer to cut my full-time job to 32 hours per week, with a commensurate pay cut. A 3-day weekend or 4-day weekend every week is pretty nice.
I'd love to tell my boss I want the same job but only work 20ish hours a week. Even if she picks what days I'm working, the long weekends would be great.
James, these kinds of examples are incredibly insightful. Thanks for doing these videos! I love seeing the various impacts that moving different levers can have on a retirement plan. Personally, I'm single and very healthy and active, so the conventional 'spending smile' probably won't apply to me, as I expect to remain active throughout retirement maintaining a pretty consistent spending level well into my 80s. I know it may not turn out that way, but that's what I want to plan for. I'd love to see some examples for single retirees with a more level spending trajectory....lets say with a $1.5 million portfolio.
I'm not sure why anyone who can afford to retire early would continue to work until 65. You do not get that time back to do what you wish with it. You risk health conditions and, in fact.. a not too unusual death age, for what? A few more years of working?
I watched with my husband, who is a CPA and he really enjoyed seeing the projections and scenarios and how one small change could make a big difference.
I agree with some of the other comments - this example is helpful but I’d like to see a specific discussion around accounting for healthcare costs if retiring before 65.
Your case studies are extremely helpful. Your methodology is spot on. Peggy Roston - I am an attorney in Alaska in my mid 70’s and your approach is what I have been looking for.
Best video yet. Only thing that is missing is understanding what those monthly expenses are, and why that wasn't the first assumption that was addressed and possibly tweaked before determining if their retirement age needed to be deferred and part time work was necessary.
I enjoyed the video and it was informative to see how big a difference small changes can make. However, going from retiring at 60 to working full time 2 more years and then part time 8 more years is a huge change! I would like to have have seen what it would look like to reduce expenses and take SS at 62 and the 65. Seems like the couple in this scenario have a spending problem.
@@jltsoyowdycjltsoyowdyc1076it's likely lower than that when including their social security at full retirement age will total $5000 per month. What they need to do is find a total retirement savings amount that will allow them to withdraw $8000 a month until full retirement age AND have the savings last through age 90 or so. That number may be around $1.5 million at age 65 for example. They would definitely need to play with different scenarios.
Retirement is changing, when you look at the numbers many people are going back to work at least part time and not just for money, but for the social benefits as well as sometimes health benefits. I am 59 and plan on retiring from my "Career Job" at the end of the year. However, I already have several ideas of what part time work I would do. With remote work, the internet and an open mind, I think I can easily find part time work that will help provide a more fulfilling retirement along with a little extra in the bank. I really believe the old idea of retire and never work again is just not been shown to work well for most people. As always James GREAT job on the video!
The concept of how making minor changes to your retirement plan can greatly increase the probability of success is a concept that should be emphasized a lot more than it is. Great video and congratulations for highlighting this important point.
Thank you James for showing this analysis, my wife and I are in almost the same boat as your example. I have retired after taking a buyout from GM last July at age 61 so financially speaking I will be fully retired at age 62. My wife is a year younger than me and will continue working until 65 because she likes her job and works remotely from home. Your perspective has given us additional confidence that what our financial planners has shown us in his forecast is sound and we are in good shape to make it to the end with money to spare!
My wife & I are 59, about to retire, we had a "come to Jesus moment" when I lost my lifelong career job at 53. I got a new job & we declared war on debt like maniacs. I activated my corporate pension at 55 (simple annuity $2k a month), paid off all debt including mortgage at 55. Then saved pure cash like maniacs (had blown our piggy on clearing the mortgage). Now 401s plus cash is $1.5mil & house is $500k. But I will add that I had anxiety about leaving my job so instead of quitting I went to 4 days with one wfh. Highly recommend reduced hours.
Hi James, I loved your video and yes please continue doing similar "real-life" scenarios. Also, I should add that what you described here is pretty much our situation. We have slightly more than $1.2M and our spending is about $6,000 per month. Expected Social Security at age 70 is as per your example. So, pretty close overall. Earlier this year, we decided to switch to part time instead of full time so that we could start enjoying life now, instead of waiting until 62.
Your spending plan on that size of portfolio is much more realistic. There is a big difference between 6k and 8k spending on the sustainability of the retirement portfolio.
This is great to see. My goal is to try and save up 1 million for retirement but I only plan to spend 40k per year. This gives me hope that its possible.
3/16/24: Hi James, I’ve watched about 20 of your videos (they are rather addictive) and THE BEST ONES for me are the case studies. A case study is by nature holistic, and the way you present them tells meaningful stories. Humans learn from stories. People whose eyes glaze over listening to detailed lectures about pre-tax or after-tax or withdrawal rates can stay focused with your stories on the important points. This helps people figure what is important for them. I’m sure they are a lot of work to produce, but the case studies are valuable. Thanks for all the different perspectives you’ve given me.
That was SUPER informative and helpful. That program you plugged figures in and generated line graphs was way more impactful than just talking figures and projections. They went from broke at 80 to up by 3 million at 90 with just a few simple adjustments! Keep this type of stuff up. Love your channel.
GREAT VIDEO. This is something that many, many financial advisors FAIL to talk about - spending and budgeting. They simply want to focus on investment selection and frankly parsing over your portfolio mix is not really a valuable use of time and energy. Also, specifically, you hit upon thoughts my wife and I have. . .working part-time and the role that plays. She wants to fully retire at age 62 and be involved in church and community. I want to continue part time at that age til age 70/72 with declining in hours maybe by 5 every year (35 hours/week at age 63, 30 at 64, etc). I work for the Federal gov't so we will get healthcare supplemental in retirement, a HUGE commodity.
Excellent case study thanks. Knowledge is power and reduces stress. Many folks are smart and successful at what they do for work but don’t know when enough is enough (to retire with confidence).
Am convinced this is one of the greatest disservices fostered upon the general population by the Social Security Administration. That is, glossing over the fact that it takes about sixteen (16) years for the increased payout at age 67 to actually 'catch up' with all the money coming in (at a lower rate) over the five (5) years in between. Even with a gap of $1,000 (it is typically much smaller) between age 67 @ $3k/mo vs. 62 @ $2/mo, that means for 5 years, you have had $120,000 in Social Security Benefits. That is, $120k NOT pulled from other savings, especially from an IRA. For the sake of simplicity, calculating 4% ROI, that is about $24,000 of additional interest INSIDE the IRA. Anyway, we seem to be in agreement as to the value of Age 62......
@@rs2352 If this was the only factor, then the math makes sense. I have run both 62 and 70 in my scenario and 62 has a far worse outcome probability of success. What occurs is that by taking less from savings, in the early years, the investments grow to a larger amount and when RMDs kick in I get pushed into a higher tax bracket. SS is also taxed. When I run the scenario at 70, the pretax savings is spent down more and does not grow as much. When SS starts, at 70, the RMD,s are minimal and are even less than the planned withdrawals. With a standard deduction, taxes go to 0. For me this makes about a $100k difference in lifetime taxes. Also a plan that has SS at 70 can be changed, to take it sooner, if plan reviews warrant it. If you take SS at 62, you can't change the plan, to take SS, at 67 if you already took it at 62. If my savings was all taxable or Roth, 62 would also make more sense.
Majority don’t have 1M after all these crashes. Do one vlog where people only have 250-500K in retirement funds left. Factor in SSA retirement income. Most people fall in this criteria. I am one of them. Good thing is I have federal pension that I rely on. Also, majority of people don’t spend $8,000/month. You are stating very unrealistic figures. You’re figures are for people with upper middle income not for the COMMON man.
This is my favorite video of yours so far. Thank you! I’m the queen of spreadsheets, but seeing examples of real,scenarios is the best way for me to process the info. ❤ This was close to my scenario including a big budget for travel. The only difference is that I cannot collect much social security because of WEP and GPO. If you could cover how that affects those of us with state pensions, that is an area very few cover other than explaining what they are.
Good review, but the main problem with John and Jane is that they were (and will likely continue to be) too big of spenders. If they were earning over 200k their retirement saving should have been well above 1 million. Their retirement funds should have been a minimum of 2 million and more likely in the 3-4 million range. Saving only 10-11% of their income was the killer, they should have been consuming less and saving 18-20% and they could have easily fully retired @60 or possibly in their mid to late 50's.
You may think that, but there are other things that can get in the way of retirement savings besides not being frugal. In my case, it’s kids school fees. I put 3 kids through college with no financial help, at a cost of about $750k. And I only had that savings because I was/am frugal. Unfortunately, I have 2 kids yet to put through school, so that pushes my retirement age out :(. You could stay poor family planning, but I wouldn’t give up any of my kids for any amount of money :).
@@cber5077Not poor family planning, but a lot of financial advice says consider your own retirement before your kids college fund. There are no loans or scholarships for retirement! As a daughter, I would appreciate if my parents had their retirement more squared away, so I wouldn't be worried about two retirements 😕 The student loans, I can handle.
@cber5077 well I hope their all Dr's at that cost. I sent my 2 kids to a local state college and one started and ended at a community College. I cash flowed it(1 salary driving a truck) by "extra work" Yeah they wanted to go with their friends out of state and pay for boarding as well for $50K a year. I just gave them the simple choice to get a student loan to pay for the difference. Or go to one of the local state colleges and graduate debt free thanks to the "Bank of Dad". I was also able fully to fully fund Roth IRA'S for each of them with the savings and all have graduated owing nothing and have a huge head start on retirement savings. I'll also add that statistics prove 47% of what kids go to college for is not what they do for their careers. So if your sacrificing you life to give as much as you can to universities at the expense of your own security, is a bad gamble. Also you could possibly make yourself a burden to your kids if you run out of $ in your old age.
Very useful. Got me to subscribe! A blend of "lecture" and modeling is good. Take this one out further and show the adjustments that move this form 74% to 95% throughout the SMILE.
Excellent video, as always. I really enjoyed the ‘true life example’ format. Very helpful to a 58 year old considering the same question as John and Jane.
New subscriber. Thanks. Yes, I enjoyed and valued the case study. More examples, as others have stated, looking at details around IRA to Roth conversions and other such tax strategies would be nice. The one thing that struck me as being a bit oversimplified, and therefore not quite realistic is the cost assumptions that would be applicable to health insurance in the first couple of scenarios. More specifically, if they stopped working now, their expenses would likely go up beyond $8000 per month for health insurance. Or conversely, their $8000 a month assumption with no longer be valid if they extend their jobs and therefore aren’t paying out-of-pocket for health. I understand you have to make some simplifications to create a simple video, but healthcare costs in the US are so significant and therefore can’t be just “assumed away.” it would be great if you can layer in the healthcare insurance scenarios in a later video.
I do enjoy these examples. I'm 62 and single, ready to retire YESTERDAY! I need to sit down with my financial adviser and see how we can make it happen. I appreciate seeing the different ideas you offer so I can go into this prepared.
This is wild. Parents retired 7 years ago with 1.3 million. They have lived solely on SS since retirement even though they have withdrawn any required investments. What are people spending all this money on? They are saving actual SS. They go out to eat several,times a month and travel 3-4 times a year. It’s more about how you want to retire
How are they making $215,000 a year and saving SO LITTLE ? 10% of $120k is $12,000 a year. $500 a month x 12 is $6,000. All of that totaled together is only $18,000 a year. Where are they spending the other $197,000 A YEAR ??? If they are spending about $16,400 a month now but then plan to live on $8,000 a month ? I am less then 5 minutes in and I have serious questions on either their savings numbers or their spending numbers.
I agree completely. They will be out of money in a few years. Plus 5 years of health coverage will be extremely expensive. I suspect they have a lot of debt.
Sounds like they fell into the trap of the More you make, the more you spend. Many high wealth individuals have very little in savings compared to income. Keeping up with the Jones is very costly.
Yes, I am one of those people that makes good money for years and not know anything about finance. Didn’t know how to save up for retirement. I think I was in lala land or something. Things would be much better had I learned all these 10 years ago. Now I have to aggressively save for retirement and teach my kids to save for their retirement. Thank you James for all your teaching. Keep up the good work.
@Sondan1988 That $215k is pre-tax. Take out 32% for Federal Income tax and 10% in state income tax and their take home is $124,700 or $10,392/mo. So they're only reducing their spending by $2,392/mo not the $17,916 your comment implies.
@@lwwarren On general principle, you're right. But I think the real answer is between you two. Federal tax brackets don't work they way you appear to be assuming. You don't pay 32% of the total when you're in that bracket, you pay that only on your top dollars - you pay the same lower rates on the first dollars that people who make less do, so everyone's effective tax rate is much lower as a straight percentage than the top bracket number they hit. Plus, a married couple making $215000 is only in the 24% tax bracket, and they only pay that on the amount they make over about $190,000, with lower rates to each bracket below that. Combine those two facts, and a couple making $215,000 sees about an 18% actual federal income tax burden. That comes up when you add in other federal non-income taxes like social security, of course - so maybe you're back at about 24% total burden, but my point is they should have more than the $10,000/month you're calculating here - probably more like $13000-14000.
I've been really enjoying and learning a lot from your videos. I think the case study format is very helpful. Would like to see a case study that shows how you factor in one of the (I think) biggest challenges faced in retirement. Appreciating home values that result in higher and higher taxes over time when you don't have any income coming in the door. Also, would like to learn more about how the home value figures into retirement calculations if you do NOT plan on moving anytime soon - or maybe even ever?
It was really useful to see how those changes affected outcomes so dramatically. I’m curious as to how people come up with their spending amounts, as $96k/year after taxes is beyond what I can even imagine. Then again, I live pretty simply.
If they live in a high property tax area, if they still have a mortgage, if they are paying a high price for healthcare before Medicare. Just a few examples, but I'd be curious about the make up of that too.
Uncanny how I came across this video. My wife and I almost fit this scenario EXACTLY. Same age, portfolio very similar, plan to retire June next year just before I turn 61. I want to see the above situation played out taking social security at 62 for both. I did the math, my "break even" age is 79.5 years old taking SS at 62 vs 67. If my wife and I take SS at 62, that is $3400 a month we don't need to take from our portfolio.
The elephant in the room you ignored was their $750,000 home equity. Given rising home values they could easily tap into 3-4% of the value of their home equity annually (reverse mortgage) without touching that asset value today ($750,000 equity) and not requiring them to work at all.
Excellent video my situation parallels the example shown with a few minor differences. Your layman's terminology (dumbing it down) for your customers is important in guiding their decision.
I have found some of your videos a little long, but this is the very best video about retirement planning I have seen on RUclips. Really enjoyed and better understand how the planning works. Thank you!
James, really helpful video with real life examples and demonstrating how small changes can make a huge difference. Now as encouraging as it is, I could not help wondering whether you have clients that are in the later stage of their retirement and whether their projections live up to realities.
My wife and I retired in 2018 at the same time. I was 65, she was 61. I started SS and we both had pensions. We had no debts except a car lease and owed nothing on our house where we moved to in Ohio from Hawaii. Our income was 85K per year after retirement. We had 990K in 401’s. Due to inheritances our assets increased by 700K 2 years later and our daughter is now a trust fund baby with a very good income after completing her 2nd masters and finding her dream job. All and all our our worries are solved.
Hi James, this is the exact info we are looking for, please keep going. My husband and I are 59, thinking about retiring at 62~63, we love traveling. Today case on this video definitely answered our questions and gave us more confidence about our financial situation if we do decide to retire earlier than 65. Thank you. BTW, just subscribed
I have two issues with this (great video overall): 1) your model assumes 20k$ per year every year for both until they turn 90 when they said they would do it until 69-70 (for a few years). Making that adjustment would change the outcome significantly. 2) Also, personally, why would a retired couple need 8k$ per month if the budget for traveling is not included? Assuming house is paid off by then, I don't see them spending that much NET per month for a car, food, taxes, utilities, etc. 8k$ is a LOT!
I thought the same thing. 8,000 net is alot of money with home paid off. I have a mortgage and looking to retire and 8,000 net would have me taking 2-3 trips a year
Nice job with this subject - using real life examples of decisions and scenarios is really insightful. Thank you, and I would like to see more of similar. Question - is the software you use available for individual consumers? It seems it would be great to use for planning.
Two years retired now, and our expenses are 30% less than projections. Best move before full retirement is creating a cash reserve equal to 3 years of expenses (2 minimum). Live off cash when market is down & replenish reserve when market is up. Before you even think of retirement, eliminate debt. Cheers!
This was a very helpful case study. I am also happy to see that it is a bit more realistic to many folks versus using a portfolio that has multiple million dollars. I listen to quite a few retirement planning podcasts and I can't tell you just how disheartening is is for me to hear them use case studies in which the person(s) have a net worth of 3, 4 or 5 + MILLION of dollars in their portfolios. I get that how much one has in the retirement portfolio is all "relative" but it's nice to encounter a case study in which the portfolio is not in the multi-million dollar range.
Terrific video! I'd love to see more like these. My wife and I are considering hiring an FA to help us through retirement, putting some of our assets under their management. I'd love to see how AUM fees affect these plans and their outcomes.
So they’re currently making $215k annually and only saving $18k? Less than 10% total. I believe they have a spending problem. I don’t think they will be happy cutting their income in half. I suspect they still have a mortgage and other debt. I don’t think they’re close to retirement.
Helpful to me. I don’t think a $20k a year job is realistic for all of retirement, but for a few years I can see it. My biggest fear is healthcare expense from retiring before 65.
Good video James. As an alternative to the 4% rule, do you construct passive dividend portfolios for retirement? I am interested in MLP's such as EPD and MPLX for a tax deferred advantage. Also, quality business development companies such as ARCC and CSWC that pay a high yield. Furthermore, utilizing covered call ETF's such as JEPI/JEPQ and REIT's such as O and SPG. I am interested in a diversified portfolio of these and more along with CD's and treasuries that are over 5%. I worry about sequence of investment returns risk with the 4% rule.
Great video. To see the changes based on small-ish tweaks is remarkable. Curious about that 750K home ... was it paid off, was there a mortage contribtuing to the 8k/month expenses ... and//or any consideration to use equity in home (if no mortgage to help and enable) retirement at 60 ... Great content as always. thank you!
Real world cases are great. Would have liked to see a Go, slow go, scenario and it’s effects as well as taking social security earlier vs working longer.
I loved this video. I usually have a hard time with RUclipsrs wasting my time or taking forever to get to the point. Thank you for being so easy to listen to and learn from. Great video. Where can I find someone to do an analysis for me?
"Strategic Traveling" is a monumental variable that should be mentioned and is critical for anyone who plans to travel. Be particular about how and when you travel and it could make the difference between retiring now and being forced to work another 5 years. In other words, forget Europe! Go to low-cost parts of the world in the beautiful blue water tropics of Indonesia, Philippines, Thailand, Viet Nam, Panama, Nicaragua, Ecuador and cut your $30,000 travel bill in half...or better. Then scrutinize your $90,000 per year requirement so you can realize why you don't need that much. It's better than continuing to work... especially past 60.
Love this rear world example. Do you offer this type of review for a flat fee? We are not prepared to leave our current CFP at this point in time but are very interested in your approach.
Case studies work well. I would like to see this same sort of video for a person running a small business. I think you need to look more closely at monthly expenses as well. When I packed it up my outlay dropped about a third.
Loved the video. Maybe my expectations are too low, but an after-tax monthly income seems a bit much. Also, $30k annually for vacations sounds like a dream. I'm single, have a house and car i own outright, and my planned $5,500 per month is making me feel greedy.
Very helpful, and I've been watching every video since I found you months ago. I appreciate your approach and the well-rounded look at all aspects of retirement. However, so many examples are married couples. There's a huge percentage of retirees and near-retirees who have been single for years, and that number increases the older we get. I would appreciate scenarios about singles who don't earn such high salaries, but have been saving as best they can. Consider women about retirement age, who have far fewer years in the workforce due to raising children and caring for parents, have never earned the salaries of men, and will have much lower Social Security income. We can't just cut expenses in half, as married couples can share expenses and single people can't. Singles have only ourselves to rely on, as we have no partner's income or benefits to reduce expenses and cushion our retirement.
It's helpful, but I doubt many people would want to mess with part time work to earn $40K a year. A more realistic withdrawal rate would be using the 4% rule which would only allow $40K/yr with $1 million in savings. That's less than half of what they wanted to spend. It all comes down to spending and assumed growth rates which is difficult to accurately predict.
The challenge with a consistent withdrawal rate is income isn’t always consistent through retirement. Example - you may need to take a higher % out before Social Security kicks in and then a lesser % after you start receiving that income.
James, you’re THE BEST educator out there in Retirement Planning!!! You are able to articulately explain everything in plain lingo and is easy to understand and follow… not to mention you are very easy on the eye too 😆 I have learned a lot from you in the last few months that I have listened to your podcast and watched your RUclips videos! I wish I can just pay for a fee to use your program/software you used in this presentation so I can do it myself because I just can’t afford to hire a CFP especially you. Let me know if this is possible please. Thank you again! God bless you and everything you do to make a difference 🙏
I’m not sure why they need 90k year to live on. I would hope their house is paid off and have very little debt. They could retire @62 and take SS at 62or 63 to offset spending their own money. I would suggest they scale back their spending and live off of say 60k a year. Limit travel expenses to 15k /yr. I’ve done it and I’m very happy.
Love this video and your other content! I would like to see a similar scenario for a single person who is 60, has 1.5 million saved, needs 3,500 per month, does not have a pension, and plans to collect 3000 monthly in social security at 70.
Hi James...Great video ! As it turns out my wife and I are almost exactly as listed in your video of "John & Jane" !! Although wifie is already retired (age 63) I planned on working 6 more years (to age 67)...Until we moved to an amazing, new & young over 55 community here in Central Florida. Your video showed us we can probably retire in 2 years or less !
I enjoy watching the case scenarios. It gives me confidence. I’d like to see one with the following. Married couple husband is 55 & wife 54 in age, 2.5M in assets- 85% in 401ks. Both earn around $130k. Husband wants to retire at age 57. Wife at 591/2. Goals are to have 10k monthly and spend $30k extra in travel for the first 10 years of husband’s retirement. Thank you!
Very helpful. Would love to see more of these real life examples. And I love that you include the dream wish list and how possible it would be to achieve. Thanks so much, James!
Super helpful, James. Combining this information with last weekend's video on retirement income strategy is excellent. As always, thank you for your time and advice.
Glad to hear you're liking the case study format! Any other specific types of topics you'd like to see a case study on?
Use case for Roth conversions utilizing your retirement planning tool.
Add passive income ideas to utilize to add monthly income when someone wants to retire before collecting social security. Add best ways to pull money from case studies particular asset mix such as taxable account, 401k, HSA, Roth 401K.
Totally agree with previous comment from @deerhunter7268. You changed the complete scenarial. What could have done with the original plan with the additional work.
Can you do a scenario with a couple with age gap?
I notice you are hitting the gym...guns lookin good!
I am a professional, 58. Been through multiple financial consultants/advisors from well established firms. These are best presentations I’ve ever received.
I'm 58, also with a million in various 401k plans. I've wondered about early retirement, but probably won't.
I think 8,000 a month for expenses is really, really high in retirement. That’s more then the average person makes a year working. I’m going by today’s Stats average personally income 63,214. Median income across the country is 44,225. WOW I was shocked at these #’s. I count my blessings everyday.
I'm pretty good at retirement planning, having studied the subject for many years. This video is level headed, comprehensive and smart advice, IMO. Great job.
It’s scary not having jobs, not seeing that direct deposits. For that reason, we drew from SS right away once we decided to retire. Psychologically, we feel better having an “income”. It took a while before realizing we had more than enough. We were not necessarily frugal minded, but we are not fancy people. We spend about $45k per year living in NYC. Once retired, your mindset changes, don’t care about stuff anymore and spending goes way down.
I'm very comfortable in Texas with the same amount; house is paid for and in a low tax area. I do travel quite a bit, at least 3 international trips per year to low cost destination; if I cut on the travel, $30K a year is sufficient.
Thank you for this post. I recently got pushed into early retirement at 55. I have some physical limitations that will make it difficult for me to get another job...but honestly, I don't think I want to work anymore. I have been pretty stressed out about the whole thing. I really appreciate seeing that you are managing on 45K in NYC. I totally agree about "not needing stuff" in retirement. Thank you for this post!
That's why every person needs to do their own assessment, with the help of a CFP. There are way too many variables. This video simply highlights how small changes can make a huge impact on your situation. It doesn't always require huge changes. Everyone has different earning ability, desires, comfort levels, etc. Don't try to insert yourself into a situation that doesn't honestly fit yours needs or desires with at least marginal wiggle room.
Love your tool that helps run scenarios. Really great, and impactful for clients, I’m sure. Have you considered other tools like SPIAs, that pay an income for life, or dividends from your investment portfolio? These would seem to only make their analysis look even better, and might be preferable to working part time from 62-70.
Yes! Do more of this with real-ish account values, perhaps including strategic Roth conversions starting around 60 years old, and seeing how future income and RMDs are affected. Very helpful. 🙌
Why are RMDs so scary?
Roth conversions around 60 will affect ACA subsidy at a time when you are not yet ready for Medicare.
The idea of working 2 more years and then part time is out of the question for many (including myself). The stress and consequential health issues make this a non-starter. I was hoping that you might first look at taking SS at 62 to determine if that has a chance at success.
If you can't work 2 more years and have only a million saved, you cannot afford to spend $8,000 a month.
You can always spend less. If you spend more like 5000 a month that solves the entire problem.
@@gauravipal9518not necessarily true. I just talked with my advisor, and he said it’s not a crazy idea to do just that. I think a lot has to do with how you’re invested. If I can find this again, I’ll let you know how our meeting goes next month.
It would be helpful to see a breakdown of this couple’s assumptions on needing $8k/month.
Yeah, $8k per month seems very high especially if they pay off the house along the way.
Probably going out to eat daily. That can be $2,500 per month right there. Maybe car payments? Property taxes. IDK
Well, that is less than half what they currently earn, so it may look frugal to them.
@@lemongavine eating out daily is probably going to help them not run out of money; they'll die sooner from all the fat and salt unless you are super careful.
What about the interest they are earning on that one million dollars??
Yes! Please do more videos like this. Something for mid-fifties, Roth conversions, SS, etc would be insightful. Thank you so much for sharing information that could change lives and perhaps allow people to see they may be able to look more seriously at being able to retire now!
@RootFP. Also good for those who are in 50's and were forced out of their long term job! I'm 55 and just got forced out of my job. I decided to take a sabbatical and I am quite liking it! Trying to make it work so that I don't have to go back into the work force. I agree with @lowersadventures4512!
Love this video! My wife and I retired two years ago from jobs with take home pay of $60,000/year combined, and my wife's job paid our health insurance. I knew our costs would be significantly higher than previous take home due to insurance, but am shocked at how much higher. Our needs exceed previous gross income but will drop $15,000 by the end of the year because of turning 65 and qualifying for Medicare. I did countless budgets prior to retiring and was wrong on every one. Thank god we saved 20% more than I thought we needed.
Trying to predict retirement expenses can be challenging.
I retired at 62 and my wife and I went on Obamacare. We didn't pay any premiums for three years until a I went on medicare. We did have a high deductible plan but we loaded up our HSA to cover the deductible. We got lucky and didn't have to pay much more than what we earned in HSA investments.
Thanks for the video. What software do you recommend for doing similar analysis?
IMO, healthcare is definitely the monster under the bed. Everyone's situation is different, but we are just shy of 62, and like an increasing number of couples, we had our children later in life, so we have a daughter who just started college. Which means a family health plan instead of just a couple's. Ours is currently costing my employer and I over $20,000/yr and that scares the crap out of me, so retiring before she graduates just seems crazy to me.
How were you so far off on your budget estimates? I've tracked my last 3 years of expenses and used that for my estimated financial needs with a little bit of cushion for unknown expenses like home repairs. I also considered taxes and health insurance. I guess I'm wondering if there's anything I might have missed.
The “consulting in my industry” fantasy is usually just that. And earning $20k at a crummy job will make you wish you just kept your original full time job.
Yes there’s no guarantee the consulting route works out
I was enjoying my job, but wanted more time not working. I worked with my employer to cut my full-time job to 32 hours per week, with a commensurate pay cut. A 3-day weekend or 4-day weekend every week is pretty nice.
I did that as a glide path for my last 2 years of work. I retired 2 weeks ago.
I'd love to tell my boss I want the same job but only work 20ish hours a week. Even if she picks what days I'm working, the long weekends would be great.
Is healthcare an additional cost to consider, or was it built into the $8k monthly expense?
James, these kinds of examples are incredibly insightful. Thanks for doing these videos! I love seeing the various impacts that moving different levers can have on a retirement plan. Personally, I'm single and very healthy and active, so the conventional 'spending smile' probably won't apply to me, as I expect to remain active throughout retirement maintaining a pretty consistent spending level well into my 80s. I know it may not turn out that way, but that's what I want to plan for. I'd love to see some examples for single retirees with a more level spending trajectory....lets say with a $1.5 million portfolio.
As a guy who IS 60 and DO have a million in my portfolio I still plan to work full time until 65. Yet still this video is inspiring to say the least.
IM 61 I have 780,000 will have a million shortly :) will be retiring at 63 or 65
sorry to hear this, hope you'll be able to it sooner
I'm not sure why anyone who can afford to retire early would continue to work until 65. You do not get that time back to do what you wish with it. You risk health conditions and, in fact.. a not too unusual death age, for what? A few more years of working?
@@Nadex2015 WOW what are your expenses per month ? You can deduct at least 200k or more , depending on your age and be in good shape.
I watched with my husband, who is a CPA and he really enjoyed seeing the projections and scenarios and how one small change could make a big difference.
I agree with some of the other comments - this example is helpful but I’d like to see a specific discussion around accounting for healthcare costs if retiring before 65.
Agree, healthcare is a huge factor to plan for before Medicare
Love this video. Please continue to demonstrate real life situations like this using your financial planning tool.
Will do! More to come.
Your case studies are extremely helpful. Your methodology is spot on. Peggy Roston - I am an attorney in Alaska in my mid 70’s and your approach is what I have been looking for.
Best video yet. Only thing that is missing is understanding what those monthly expenses are, and why that wasn't the first assumption that was addressed and possibly tweaked before determining if their retirement age needed to be deferred and part time work was necessary.
I enjoyed the video and it was informative to see how big a difference small changes can make. However, going from retiring at 60 to working full time 2 more years and then part time 8 more years is a huge change! I would like to have have seen what it would look like to reduce expenses and take SS at 62 and the 65. Seems like the couple in this scenario have a spending problem.
I definitely don't need $8000 a month. And there's no way I'm working even part time until 70!
My exact thoughts, If you want to spend $100k/year and retire well before Medicare and SS, 2 million is a more realistic target than 1mil.
@@jltsoyowdycjltsoyowdyc1076it's likely lower than that when including their social security at full retirement age will total $5000 per month. What they need to do is find a total retirement savings amount that will allow them to withdraw $8000 a month until full retirement age AND have the savings last through age 90 or so. That number may be around $1.5 million at age 65 for example. They would definitely need to play with different scenarios.
Same. I’d like to see that too.
Retirement is changing, when you look at the numbers many people are going back to work at least part time and not just for money, but for the social benefits as well as sometimes health benefits. I am 59 and plan on retiring from my "Career Job" at the end of the year. However, I already have several ideas of what part time work I would do. With remote work, the internet and an open mind, I think I can easily find part time work that will help provide a more fulfilling retirement along with a little extra in the bank. I really believe the old idea of retire and never work again is just not been shown to work well for most people. As always James GREAT job on the video!
The concept of how making minor changes to your retirement plan can greatly increase the probability of success is a concept that should be emphasized a lot more than it is. Great video and congratulations for highlighting this important point.
Being 60, This was very close to my scenario, I appreciate the in and outs. Well done! Thanks.
Thank you James for showing this analysis, my wife and I are in almost the same boat as your example. I have retired after taking a buyout from GM last July at age 61 so financially speaking I will be fully retired at age 62. My wife is a year younger than me and will continue working until 65 because she likes her job and works remotely from home. Your perspective has given us additional confidence that what our financial planners has shown us in his forecast is sound and we are in good shape to make it to the end with money to spare!
My wife & I are 59, about to retire, we had a "come to Jesus moment" when I lost my lifelong career job at 53. I got a new job & we declared war on debt like maniacs. I activated my corporate pension at 55 (simple annuity $2k a month), paid off all debt including mortgage at 55. Then saved pure cash like maniacs (had blown our piggy on clearing the mortgage). Now 401s plus cash is $1.5mil & house is $500k. But I will add that I had anxiety about leaving my job so instead of quitting I went to 4 days with one wfh. Highly recommend reduced hours.
James, you killed it on this one. As always, your presentation is fantastic.
Thanks, Harold! I appreciate the feedback and I’ll look to do more videos like this in the future.
Hi James, I loved your video and yes please continue doing similar "real-life" scenarios. Also, I should add that what you described here is pretty much our situation. We have slightly more than $1.2M and our spending is about $6,000 per month. Expected Social Security at age 70 is as per your example. So, pretty close overall. Earlier this year, we decided to switch to part time instead of full time so that we could start enjoying life now, instead of waiting until 62.
Your spending plan on that size of portfolio is much more realistic. There is a big difference between 6k and 8k spending on the sustainability of the retirement portfolio.
This is great to see. My goal is to try and save up 1 million for retirement but I only plan to spend 40k per year. This gives me hope that its possible.
3/16/24: Hi James, I’ve watched about 20 of your videos (they are rather addictive) and THE BEST ONES for me are the case studies. A case study is by nature holistic, and the way you present them tells meaningful stories. Humans learn from stories. People whose eyes glaze over listening to detailed lectures about pre-tax or after-tax or withdrawal rates can stay focused with your stories on the important points. This helps people figure what is important for them. I’m sure they are a lot of work to produce, but the case studies are valuable. Thanks for all the different perspectives you’ve given me.
James, we need a video comparing the 4% rule vs Bucket Strategy.....and when would you choose one over the other....
That was SUPER informative and helpful. That program you plugged figures in and generated line graphs was way more impactful than just talking figures and projections. They went from broke at 80 to up by 3 million at 90 with just a few simple adjustments! Keep this type of stuff up. Love your channel.
Glad it was helpful! More videos like this to come.
GREAT VIDEO. This is something that many, many financial advisors FAIL to talk about - spending and budgeting. They simply want to focus on investment selection and frankly parsing over your portfolio mix is not really a valuable use of time and energy.
Also, specifically, you hit upon thoughts my wife and I have. . .working part-time and the role that plays. She wants to fully retire at age 62 and be involved in church and community. I want to continue part time at that age til age 70/72 with declining in hours maybe by 5 every year (35 hours/week at age 63, 30 at 64, etc). I work for the Federal gov't so we will get healthcare supplemental in retirement, a HUGE commodity.
Excellent case study thanks. Knowledge is power and reduces stress. Many folks are smart and successful at what they do for work but don’t know when enough is enough (to retire with confidence).
yes James, this real life scenario is very helpful. What if if they both collect social security at 62 would that be a profound change as well?
Am convinced this is one of the greatest disservices fostered upon the general population by the Social Security Administration. That is, glossing over the fact that it takes about sixteen (16) years for the increased payout at age 67 to actually 'catch up' with all the money coming in (at a lower rate) over the five (5) years in between.
Even with a gap of $1,000 (it is typically much smaller) between age 67 @ $3k/mo vs. 62 @ $2/mo, that means for 5 years, you have had $120,000 in Social Security Benefits.
That is, $120k NOT pulled from other savings, especially from an IRA.
For the sake of simplicity, calculating 4% ROI, that is about $24,000 of additional interest INSIDE the IRA.
Anyway, we seem to be in agreement as to the value of Age 62......
I was wondering the same thing and curious how that would impact things
@@rs2352 If this was the only factor, then the math makes sense. I have run both 62 and 70 in my scenario and 62 has a far worse outcome probability of success. What occurs is that by taking less from savings, in the early years, the investments grow to a larger amount and when RMDs kick in I get pushed into a higher tax bracket. SS is also taxed. When I run the scenario at 70, the pretax savings is spent down more and does not grow as much. When SS starts, at 70, the RMD,s are minimal and are even less than the planned withdrawals. With a standard deduction, taxes go to 0. For me this makes about a $100k difference in lifetime taxes. Also a plan that has SS at 70 can be changed, to take it sooner, if plan reviews warrant it. If you take SS at 62, you can't change the plan, to take SS, at 67 if you already took it at 62. If my savings was all taxable or Roth, 62 would also make more sense.
Majority don’t have 1M after all these crashes. Do one vlog where people only have 250-500K in retirement funds left. Factor in SSA retirement income.
Most people fall in this criteria. I am one of them. Good thing is I have federal pension that I rely on.
Also, majority of people don’t spend $8,000/month. You are stating very unrealistic figures. You’re figures are for people with upper middle income not for the COMMON man.
Yes, please more examples and comments. It helps to drive the points home. Especially when I share the links with family and friends.
1 of the best retirement videos I have watched. Cements in my mind that we need to see our planner for a custom scenario. Thank you
This is my favorite video of yours so far. Thank you! I’m the queen of spreadsheets, but seeing examples of real,scenarios is the best way for me to process the info. ❤ This was close to my scenario including a big budget for travel. The only difference is that I cannot collect much social security because of WEP and GPO. If you could cover how that affects those of us with state pensions, that is an area very few cover other than explaining what they are.
Good review, but the main problem with John and Jane is that they were (and will likely continue to be) too big of spenders. If they were earning over 200k their retirement saving should have been well above 1 million. Their retirement funds should have been a minimum of 2 million and more likely in the 3-4 million range. Saving only 10-11% of their income was the killer, they should have been consuming less and saving 18-20% and they could have easily fully retired @60 or possibly in their mid to late 50's.
Exactly what I was thinking!
You may think that, but there are other things that can get in the way of retirement savings besides not being frugal. In my case, it’s kids school fees. I put 3 kids through college with no financial help, at a cost of about $750k. And I only had that savings because I was/am frugal. Unfortunately, I have 2 kids yet to put through school, so that pushes my retirement age out :(.
You could stay poor family planning, but I wouldn’t give up any of my kids for any amount of money :).
@@cber5077Not poor family planning, but a lot of financial advice says consider your own retirement before your kids college fund. There are no loans or scholarships for retirement!
As a daughter, I would appreciate if my parents had their retirement more squared away, so I wouldn't be worried about two retirements 😕 The student loans, I can handle.
Possibly. But quite often that higher salary comes at the tail end of your working career.
@cber5077 well I hope their all Dr's at that cost. I sent my 2 kids to a local state college and one started and ended at a community College. I cash flowed it(1 salary driving a truck) by "extra work" Yeah they wanted to go with their friends out of state and pay for boarding as well for $50K a year. I just gave them the simple choice to get a student loan to pay for the difference. Or go to one of the local state colleges and graduate debt free thanks to the "Bank of Dad". I was also able fully to fully fund Roth IRA'S for each of them with the savings and all have graduated owing nothing and have a huge head start on retirement savings. I'll also add that statistics prove 47% of what kids go to college for is not what they do for their careers. So if your sacrificing you life to give as much as you can to universities at the expense of your own security, is a bad gamble. Also you could possibly make yourself a burden to your kids if you run out of $ in your old age.
Very useful. Got me to subscribe! A blend of "lecture" and modeling is good. Take this one out further and show the adjustments that move this form 74% to 95% throughout the SMILE.
Excellent video, as always. I really enjoyed the ‘true life example’ format. Very helpful to a 58 year old considering the same question as John and Jane.
Glad it was helpful!
The question should not be "how much can I spend," it should be "how much do I need."
New subscriber. Thanks. Yes, I enjoyed and valued the case study. More examples, as others have stated, looking at details around IRA to Roth conversions and other such tax strategies would be nice. The one thing that struck me as being a bit oversimplified, and therefore not quite realistic is the cost assumptions that would be applicable to health insurance in the first couple of scenarios. More specifically, if they stopped working now, their expenses would likely go up beyond $8000 per month for health insurance. Or conversely, their $8000 a month assumption with no longer be valid if they extend their jobs and therefore aren’t paying out-of-pocket for health. I understand you have to make some simplifications to create a simple video, but healthcare costs in the US are so significant and therefore can’t be just “assumed away.” it would be great if you can layer in the healthcare insurance scenarios in a later video.
I do enjoy these examples. I'm 62 and single, ready to retire YESTERDAY! I need to sit down with my financial adviser and see how we can make it happen. I appreciate seeing the different ideas you offer so I can go into this prepared.
This is wild. Parents retired 7 years ago with 1.3 million. They have lived solely on SS since retirement even though they have withdrawn any required investments. What are people spending all this money on? They are saving actual SS. They go out to eat several,times a month and travel 3-4 times a year. It’s more about how you want to retire
The real life example was helpful. You should include more like this.
How are they making $215,000 a year and saving SO LITTLE ? 10% of $120k is $12,000 a year. $500 a month x 12 is $6,000. All of that totaled together is only $18,000 a year. Where are they spending the other $197,000 A YEAR ??? If they are spending about $16,400 a month now but then plan to live on $8,000 a month ? I am less then 5 minutes in and I have serious questions on either their savings numbers or their spending numbers.
I agree completely. They will be out of money in a few years. Plus 5 years of health coverage will be extremely expensive. I suspect they have a lot of debt.
Sounds like they fell into the trap of the More you make, the more you spend. Many high wealth individuals have very little in savings compared to income. Keeping up with the Jones is very costly.
Yes, I am one of those people that makes good money for years and not know anything about finance. Didn’t know how to save up for retirement. I think I was in lala land or something. Things would be much better had I learned all these 10 years ago.
Now I have to aggressively save for retirement and teach my kids to save for their retirement.
Thank you James for all your teaching. Keep up the good work.
@Sondan1988 That $215k is pre-tax. Take out 32% for Federal Income tax and 10% in state income tax and their take home is $124,700 or $10,392/mo. So they're only reducing their spending by $2,392/mo not the $17,916 your comment implies.
@@lwwarren On general principle, you're right. But I think the real answer is between you two. Federal tax brackets don't work they way you appear to be assuming. You don't pay 32% of the total when you're in that bracket, you pay that only on your top dollars - you pay the same lower rates on the first dollars that people who make less do, so everyone's effective tax rate is much lower as a straight percentage than the top bracket number they hit. Plus, a married couple making $215000 is only in the 24% tax bracket, and they only pay that on the amount they make over about $190,000, with lower rates to each bracket below that. Combine those two facts, and a couple making $215,000 sees about an 18% actual federal income tax burden. That comes up when you add in other federal non-income taxes like social security, of course - so maybe you're back at about 24% total burden, but my point is they should have more than the $10,000/month you're calculating here - probably more like $13000-14000.
I've been really enjoying and learning a lot from your videos. I think the case study format is very helpful. Would like to see a case study that shows how you factor in one of the (I think) biggest challenges faced in retirement. Appreciating home values that result in higher and higher taxes over time when you don't have any income coming in the door. Also, would like to learn more about how the home value figures into retirement calculations if you do NOT plan on moving anytime soon - or maybe even ever?
Yes, James this was very helpful with this format. Please do more and consider doing more with single people and maybe some estate planning.
It was really useful to see how those changes affected outcomes so dramatically. I’m curious as to how people come up with their spending amounts, as $96k/year after taxes is beyond what I can even imagine. Then again, I live pretty simply.
Happy it was helpful!
If they live in a high property tax area, if they still have a mortgage, if they are paying a high price for healthcare before Medicare. Just a few examples, but I'd be curious about the make up of that too.
Love the real world example James. More like this!
Will do! Thank you.
Great vid. I know it’s not applicable to everyone but it’s great to see the levers to consider.
Uncanny how I came across this video. My wife and I almost fit this scenario EXACTLY. Same age, portfolio very similar, plan to retire June next year just before I turn 61. I want to see the above situation played out taking social security at 62 for both. I did the math, my "break even" age is 79.5 years old taking SS at 62 vs 67. If my wife and I take SS at 62, that is $3400 a month we don't need to take from our portfolio.
The elephant in the room you ignored was their $750,000 home equity. Given rising home values they could easily tap into 3-4% of the value of their home equity annually (reverse mortgage) without touching that asset value today ($750,000 equity) and not requiring them to work at all.
Did he say the home was paid-off? I missed that part.
Reverse mortgages are garbage the majority of the time
Very helpful to see actual case study. Thank you!!!
Thanks for letting me know! More to come.
Excellent video my situation parallels the example shown with a few minor differences.
Your layman's terminology (dumbing it down) for your customers is important in guiding their decision.
Glad it was helpful!
I have found some of your videos a little long, but this is the very best video about retirement planning I have seen on RUclips. Really enjoyed and better understand how the planning works. Thank you!
James, really helpful video with real life examples and demonstrating how small changes can make a huge difference. Now as encouraging as it is, I could not help wondering whether you have clients that are in the later stage of their retirement and whether their projections live up to realities.
My wife and I retired in 2018 at the same time. I was 65, she was 61. I started SS and we both had pensions. We had no debts except a car lease and owed nothing on our house where we moved to in Ohio from Hawaii. Our income was 85K per year after retirement. We had 990K in 401’s. Due to inheritances our assets increased by 700K 2 years later and our daughter is now a trust fund baby with a very good income after completing her 2nd masters and finding her dream job. All and all our our worries are solved.
Hi James, this is the exact info we are looking for, please keep going. My husband and I are 59, thinking about retiring at 62~63, we love traveling. Today case on this video definitely answered our questions and gave us more confidence about our financial situation if we do decide to retire earlier than 65. Thank you. BTW, just subscribed
I have two issues with this (great video overall): 1) your model assumes 20k$ per year every year for both until they turn 90 when they said they would do it until 69-70 (for a few years). Making that adjustment would change the outcome significantly. 2) Also, personally, why would a retired couple need 8k$ per month if the budget for traveling is not included? Assuming house is paid off by then, I don't see them spending that much NET per month for a car, food, taxes, utilities, etc. 8k$ is a LOT!
I thought the same thing. 8,000 net is alot of money with home paid off. I have a mortgage and looking to retire and 8,000 net would have me taking 2-3 trips a year
Nice job with this subject - using real life examples of decisions and scenarios is really insightful. Thank you, and I would like to see more of similar. Question - is the software you use available for individual consumers? It seems it would be great to use for planning.
James great video and informative. I would like to see more of these real life scenarios.
Will do! Thank you 🙏🏼
Two years retired now, and our expenses are 30% less than projections. Best move before full retirement is creating a cash reserve equal to 3 years of expenses (2 minimum). Live off cash when market is down & replenish reserve when market is up. Before you even think of retirement, eliminate debt. Cheers!
This was a very helpful case study. I am also happy to see that it is a bit more realistic to many folks versus using a portfolio that has multiple million dollars. I listen to quite a few retirement planning podcasts and I can't tell you just how disheartening is is for me to hear them use case studies in which the person(s) have a net worth of 3, 4 or 5 + MILLION of dollars in their portfolios. I get that how much one has in the retirement portfolio is all "relative" but it's nice to encounter a case study in which the portfolio is not in the multi-million dollar range.
Terrific video! I'd love to see more like these. My wife and I are considering hiring an FA to help us through retirement, putting some of our assets under their management. I'd love to see how AUM fees affect these plans and their outcomes.
So they’re currently making $215k annually and only saving $18k? Less than 10% total. I believe they have a spending problem. I don’t think they will be happy cutting their income in half. I suspect they still have a mortgage and other debt. I don’t think they’re close to retirement.
I mean the scenario of spending 8k a month seems insane to me as well lol. Like you have a paid off house, no debt but spend 8k a month?
Yeah and they want $8k a month and that doesn’t include travel?
Helpful to me. I don’t think a $20k a year job is realistic for all of retirement, but for a few years I can see it. My biggest fear is healthcare expense from retiring before 65.
It makes us feel much better. We are both 50 with almost $1M plus a small military retirement. This was helpful
The only thing worse than having a million dollars for retirement is not having a million dollars for retirement.... 😊
And thinking a million dollars is a lot of money.
Good video James. As an alternative to the 4% rule, do you construct passive dividend portfolios for retirement? I am interested in MLP's such as EPD and MPLX for a tax deferred advantage. Also, quality business development companies such as ARCC and CSWC that pay a high yield. Furthermore, utilizing covered call ETF's such as JEPI/JEPQ and REIT's such as O and SPG. I am interested in a diversified portfolio of these and more along with CD's and treasuries that are over 5%. I worry about sequence of investment returns risk with the 4% rule.
I like the format of this video. Seeing the data made a big difference 😊
WOW, I love this format. As a soon to be 57 year old worker in an extremely high stress healthcare setting, this is music to my ears!
Great video. To see the changes based on small-ish tweaks is remarkable. Curious about that 750K home ... was it paid off, was there a mortage contribtuing to the 8k/month expenses ... and//or any consideration to use equity in home (if no mortgage to help and enable) retirement at 60 ...
Great content as always. thank you!
If they live in NJ the high property tax could contribute to their monthly costs plus insurance and maintenance costs.
You did a very good job on explaining the details on each example presented in RUclips channel. My wife likes it too. Thank you.
Yes. An actual case study helps put things in perspective and applicability.
Thank you for the feedback. I agree.
Real world cases are great. Would have liked to see a Go, slow go, scenario and it’s effects as well as taking social security earlier vs working longer.
I loved this video. I usually have a hard time with RUclipsrs wasting my time or taking forever to get to the point. Thank you for being so easy to listen to and learn from. Great video. Where can I find someone to do an analysis for me?
When I see these thumbnails, the first thing this channel should do is teach people to ask the right questions.
"Strategic Traveling" is a monumental variable that should be mentioned and is critical for anyone who plans to travel. Be particular about how and when you travel and it could make the difference between retiring now and being forced to work another 5 years. In other words, forget Europe! Go to low-cost parts of the world in the beautiful blue water tropics of Indonesia, Philippines, Thailand, Viet Nam, Panama, Nicaragua, Ecuador and cut your $30,000 travel bill in half...or better. Then scrutinize your $90,000 per year requirement so you can realize why you don't need that much. It's better than continuing to work... especially past 60.
Love this rear world example. Do you offer this type of review for a flat fee? We are not prepared to leave our current CFP at this point in time but are very interested in your approach.
Case studies work well. I would like to see this same sort of video for a person running a small business. I think you need to look more closely at monthly expenses as well. When I packed it up my outlay dropped about a third.
Case studies I think are the most instructive. Make case studies part of your video creation.
Loved the video. Maybe my expectations are too low, but an after-tax monthly income seems a bit much. Also, $30k annually for vacations sounds like a dream. I'm single, have a house and car i own outright, and my planned $5,500 per month is making me feel greedy.
I find case studies very helpful as it helps me learn the principles involved more easily. Fantastic and helpful content!
Yes, very helpful to see an actual plan and how changes make a difference
Thanks David. I’ll start preparing more videos like this.
Very helpful, and I've been watching every video since I found you months ago. I appreciate your approach and the well-rounded look at all aspects of retirement.
However, so many examples are married couples. There's a huge percentage of retirees and near-retirees who have been single for years, and that number increases the older we get. I would appreciate scenarios about singles who don't earn such high salaries, but have been saving as best they can. Consider women about retirement age, who have far fewer years in the workforce due to raising children and caring for parents, have never earned the salaries of men, and will have much lower Social Security income. We can't just cut expenses in half, as married couples can share expenses and single people can't. Singles have only ourselves to rely on, as we have no partner's income or benefits to reduce expenses and cushion our retirement.
Great feedback. I’ll do a video like this soon.
It's helpful, but I doubt many people would want to mess with part time work to earn $40K a year. A more realistic withdrawal rate would be using the 4% rule which would only allow $40K/yr with $1 million in savings. That's less than half of what they wanted to spend. It all comes down to spending and assumed growth rates which is difficult to accurately predict.
The challenge with a consistent withdrawal rate is income isn’t always consistent through retirement. Example - you may need to take a higher % out before Social Security kicks in and then a lesser % after you start receiving that income.
@@RootFP Agreed. I think showing that scenario would be very realistic without an assumed income after retirement. Thanks! Enjoy your videos.
James, you’re THE BEST educator out there in Retirement Planning!!! You are able to articulately explain everything in plain lingo and is easy to understand and follow… not to mention you are very easy on the eye too 😆
I have learned a lot from you in the last few months that I have listened to your podcast and watched your RUclips videos!
I wish I can just pay for a fee to use your program/software you used in this presentation so I can do it myself because I just can’t afford to hire a CFP especially you.
Let me know if this is possible please. Thank you again! God bless you and everything you do to make a difference 🙏
Can you do video about how to set up monthly check in retirement? What portfolio can be set up that gives monthly income but grow too.
I’m not sure why they need 90k year to live on. I would hope their house is paid off and have very little debt. They could retire @62 and take SS at 62or 63 to offset spending their own money. I would suggest they scale back their spending and live off of say 60k a year. Limit travel expenses to 15k /yr. I’ve done it and I’m very happy.
One of your best videos yet. Please do more of the case studies.
Love the case study video! I'd love to see the effect of modeling Roth conversions and the Tax Cut and Jobs Act expiration.
James, this is helpful. Thanks for demonstrating the various scenarios.
Love this video and your other content! I would like to see a similar scenario for a single person who is 60, has 1.5 million saved, needs 3,500 per month, does not have a pension, and plans to collect 3000 monthly in social security at 70.
Hi James...Great video ! As it turns out my wife and I are almost exactly as listed in your video of "John & Jane" !! Although wifie is already retired (age 63) I planned on working 6 more years (to age 67)...Until we moved to an amazing, new & young over 55 community here in Central Florida. Your video showed us we can probably retire in 2 years or less !
I enjoy watching the case scenarios. It gives me confidence. I’d like to see one with the following. Married couple husband is 55 & wife 54 in age, 2.5M in assets- 85% in 401ks. Both earn around $130k. Husband wants to retire at age 57. Wife at 591/2. Goals are to have 10k monthly and spend $30k extra in travel for the first 10 years of husband’s retirement. Thank you!
Love this format. Do $2 million next please.
I'll add it to the list!
Very helpful. Would love to see more of these real life examples. And I love that you include the dream wish list and how possible it would be to achieve. Thanks so much, James!
More to come!
This is the video that I have been wanting to see. More case studies please ;)
Super helpful, James. Combining this information with last weekend's video on retirement income strategy is excellent. As always, thank you for your time and advice.
Excellent! Thank you for the feedback.