Retirement Planning: I'm 58 Years Old With $1.4 Million, Can I Retire?
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- Опубликовано: 11 сен 2024
- Troy Sharpe, CFP®, recently read an article online where a 58-year-old man with $1.4 million saved up asked if he had enough to retire. He had $700,000 in a 401(k) account and $700,000 in a non-qualified account. In this episode, Troy looks at 1,000 different scenarios looking at the probability of successfully retiring without running out of money, given the current economic situation.
#dontrunoutofmoney #successfulretirement #enoughtoretire
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I retired at 56 thanks to my wife. It wouldn't have been possible without her company stock plan because it far exceeded the 401k we both have. She is six years older than me and was sick of the day to day grind but we had no clue if our savings and investments would be sufficient, we finally went to a financial management meeting and they gathered all our paperwork and prepared a plan for our early retirement. We should have done this years ago but never considered that we might ever have enough to retire early and I thank God and my wife for the ability to do so. We are not rich but everything is paid for and we have crappy health insurance but we are free to roam! Don't wait time is something we have in short supply and no amount of money will buy you more.
True that money can't buy you more time, but if the money runs out before time, then what??
@@JoeSmith-nu8oo Joe that's why you have a long term financial plan. You still need to be careful but don't be afraid. Also pay off everything.
If you're doing what you want, and have enough money to live, you're ahead! My inlaws retired early and it's good that they did, they had a few years where they could travel and explore, but sadly Theo had a stroke and died while on vacation. You never know how much time you really have, so it's important to live your life as fully.
If you are thanking your wife, you are having a great life.
If you need serious health care, just hop on a plane to almost anywhere else besides the US.
58 years old and $1.4 million, what he waiting for , when I was 56 yeas old I retired , with $1.1 million, now I"m 72 yeas old and I'm doing very well.
Congratulations Domingo. Welcome to our channel...
That was around 2005. What was your money invested in during the 2008 and 09 crash?
@@canyonoverlook9937 good question
Are these really difficult scenarios ? $1+ Million under the pillow and folks sweating it out to retire ? Plus dual Soc Sec pmts coming in ? Seriously ? Sounds like whiny lifelong Govt Hacks to me.
Wow! Great. Kindly give some tips on how you did it.
I did it at 49 years old with 1.1 million. Everything paid for. If you can't make it for 35 years on that, you'd have never accumulated 1.4 to begin with
Roughly what are you medical/dental insurance bills?
Easy to retire at 49 with 1.1 million if you have no kids and don't plan on living past 55.
I have no kids and don't plan living past 55.
@@carlkpsplucky5554 It also largely depends upon locale. $50K per year is quite generous in a small town, but you would end up living in a box van on that income in San Francisco or Palo Alto.
@@arturtoth3185 The problem is your plan, you will to 81 yrs of age.
The key is not just how much money you have but how much you spend. If you don't spend extravagently and expect to take a cruise every year you can live reasonably on a modest income. I left work at 62 and live off SS and a very small pension, I own my own home, have no debt, reasonable health, and live a quiet life. I didn't start to take anything out of my retirement savings till I had to when I was required to take my required minimum distributions when I was 70-1/2.
Well you do want to take vacation
Plus crusies are not that expensive
@LeaveTheEstateTax Alone You don't have to spend big money for a cruise. I'm sure you can get a nice one for a week for less than 5k.
Wasn't that information given in the video?
So, what is the answer?
@LeaveTheEstateTax Alone Nice, referring to what? You think you're a big snob there? Lmfao You don't have to spend 40K on one of your fantastic cruises to enjoy yourself, it's all just wealth signalling. If you're that rich, and want to show everyone, why don't you just buy your own super yacht and travel the world, big guy?
@LeaveTheEstateTax Alone I think you're full of it, so send some pics of you on your 40K cruise. You can send the link on here.
Be wary. When an investment counselor talks about guaranteed income, they are generally talking about a policy they make a commission on selling to you. Plus “guaranteed “ is a little misleading because the money is in one company account that has no federal insurance so the payout is only guaranteed if the company doesn’t fold and is able to make payments.
Fair enough.
Have any annuity companies ever done what you describe? (Folded)
@@gregh7457 The only guaranteed income is the income the company makes from selling you their policies.
@@pubmeatman lock who up, and for what?
The annuity salesmen like to use payout % to confuse people into thinking it’s their yield. Be very very wary
Even If you retire with little savings, but you do have 6k monthly income, and your house is paid off, I don’t think you would have any problem.
It all depends on someones spending habits.
I get sick when I already read the headline: can I retire with 1 million.? Do you know how many people have to make it on a small social security check? My answer is if you got all this money and you are not sure if a million will last you, just live within your means, cut back and be CONTENT,!!
You are absolutely correct! This video is made to scare average people. I will have between $400-500 max (everything added) when I retire and I think I will be fine. I still plan to go for an early retirement at age 62. I want to enjoy life than keep working and saving hoping to use it when I can hardly walk.
I’m in my mid-50’s and completely enjoy my physically demanding career of landscaping. I want to work as long as I can because I really really enjoy it. Currently, debt free with and business keeps growing. I’m just concerned I will be bored about 10:00 A.M. on the very first day of retirement after I read the paper, go for a walk and finish reading the newspaper, I know I will need to reinvent myself because I put my heart and soul in my career.
Hi Scott,
Thanks for your comment. I interviewed a psychologist this morning for a video regarding Finding Your Identity in Retirement, specifically focused on your comment. It will be released in a couple weeks but we mention you so be on the lookout! Keep watching and thanks for the inspiration!
Scott, here is a link to the video we made: ruclips.net/video/IQ6XQatWNZc/видео.html
Scott, believe me you will find plenty of things to do. Catching up on all of the little projects around the house, working out at the fitness center 5 days a week. Take up golf, I play 3 days a week with my other retired friends! Go out for lunches with the wife/ girlfriend. Ride your bike or Harley. Go shooting. Help the kids with projects around their house. Watch the grandkids. I’m busier now then when I was working. I retired last year at 57 yrs 7 mo and loving it!
You never addressed the home. If it is paid for or close to paid in full that will be a huge difference.
That would be part of what the couple said they would need monthly or annual. It was not spelled out but was included. Just like car payments...so on...
@@nmtumbleweed Just run some quick numbers for me. At a 4% withdrawal rate how much money do they need to cover the mortgage payment. Then how much money would it take to pay off the mortgage. And finally if you don’t have and don’t need to make a mortgage payment how much do you save in federal income tax? How much does this reduce the amount of social security subject to federal income tax. For my household it changes the total nest egg needed by about $200,000.
@@jimjensen9139
Jim, this wasn’t a client, it was taken from a letter to a financial editor/newspaper, so they are just using the figures that were published as an example.
The question is not can I retire... yes you can... anytime... the real question is can I maintain my current lifestyle if I retire...
Automatically you're expences will drop like not needing transport to work, working clothes, eating in the restaurant on your lunch break etc. So if you want to retire you're lifestyle will never be the same and much cheaper
@@thomasmaduro6107 I'm going to disagree with you Thomas. Not during the go-go years. You are spending more for travel, sports, eating out, and exploring the new you.
The health insurance prior to age 65 is really a wrecking ball. That's not even considering costs if actual medical issues arise. Makes me want to consider going abroad to bridge that time...
Where would you go?
I agree
If you have 1.4 million in savings, there are several ways to generate a modest "income" which qualifies you for substantial ACA subsidies.
@@stellasatterlee7332 How about Bali,Indonesia?
My mom’s been retired for 15 years and still living off of $1800 in month she made sure everything was paid off before she retired and lives in Canada so healthcare is free.And to stay busy and happy she does meals on wheels and charity work and that doesn’t cost her anything
@@VTGDFGGGT55RTT However, if you don't drink beer, you'll save a lot of money.
Let's say, you drink 2 cases a month, that's $960 Canadian dollars a yr. that you'll save.
@@farshimelt Agreed! That is $960 that you can now spend on cigarettes!
Free😂😂😂
Today it's not about return ON capital. Today it is about return OF capital.
Excellent point.
I took an AXA Annuity and I was told that once I annuitize I would not be charged the annual fees, but once I die the balance goes to AXA. The agent did not put spousal support on the investment. Never go with an annuity ....if I had the cash in the market I would have made an additional 200k over fifteen years. Annuities are very complex
Never getting annuity you can never get your Principal back if you need it. Annuities are a bad idea Learn everything you can about them.
When I asked an accountant about annuities, he said, "If it were me, I wouldn't do it." I didn't.
Michael, annuitizung and using an income rider or joint income rider are 2 very different things.
@@johnjaco5544 that's not accurate. Usually principal is tied up for the contract length (5 to 10 years), but has some free withdrawal percentages and a surrender penalty schedule. At the end of contract entire balance e is available to move. However in this example, if a client has allocated the funds for income, the client should be less concerned about principal and more on the income stream.
How do y’all justify your all-in cost to the client? The annuity you’re placing them in has to have an internal expense of at least 1-2%; assuming you’re charging an additional 0.5-1% given AUM. Why can’t you responsibly place your client in a diversified mutual fund/ etf portfolio where you can easily pull levers to meet a client’s changing risk tolerance / goals, be in control of their asset allocation should the client want to take on more risk/ take risk off the table or make a change if a certain fund/ sector is consistently underperforming. What strategic value are you providing to the client as their advisor to justify your fee?
Don’t want to speak for him, but to me, the value of the advisory is in the building and maintenance of the holistic financial plan, including the tax planning using asset location (not allocation, but what assets are taxable and which aren’t). For me, working with an advisor now for the “decumulation” phase of my life, has given me the piece of mind to sleep much better at night. I’ve been working with my advisor for a year and I’m 56.5 and will retire at either 58 or 59. I did a good job during accumulation, but I know enough to know I don’t know enough to maximize my retirement years without the help of the advisor. I think if your half way savvy and disciplined, you can handle the accumulation phase by your self, but decumulation is quite different and handling it in the most efficient manner, is the key and where the advisor earns his 1%. As to an annuity, I put a good amount into a variable annuity with a living benefit 10 years ago. It has tripled in value over that 10 years (Jackson National is the only company that can get those kind of returns for you for what its worth). It’s now about 1/3 of my total Investable assets (no real estate used, I don’t include it in my conservative plan) and between it and SS, I can have 80% of my retirement needs taken care of for my life and my wife’s. My portfolio only needs to cover about 20% of my spending needs and its 2/3 of my investable assets! So to me, the annuity helped me create my own pension and move up the minimum retirement “floor”. Take all of this what you will but annuities for 1/3 of your investable assets and a good financial professional for the rest has provided me with the piece of mind to know I will make it very easily in retirement when it starts at 58 or 59 and helps me sleep at night. Cost is only an issue in the absence of value, that’s not the case for me!
Agreed 1000%. I think AUM of 1% is a lot unless he has tax planning, estate planning, and real estate knowledge on top of the financial stuff. Hard to find a guy that truly knows it all and not just stringing me along thinking I'm a dummy. I know intermediate level tax, estate, and real estate. I need someone that knows more than me. Probably better to hire a separate CPA and estate planning lawyer a-la-carte and I'll DIY the investments.
This guy is trying to scare you to sell you a crappy annuity
@@billb7794 I’m not a big annuity guy myself and don’t incorporate them often into clients plans. I also don’t think they’re bad in every instance. I just don’t like them as a “general prescription” to retirees due to their high internal expenses/ surrender charges and (somewhat) limited flexibility. I’m an Associate Advisor at a WM firm btw. That last sentence you mentioned is a big one. One that I’m constantly reminding myself of and I’m glad you’re experiencing that with your current professional.
Charles, I ask myself this question every time I watch these videos. Where is the value? Is this guy just an annuity salesman? Maybe his value is in tax planning?
short answer yes you can retire on 1.4 million and much less, it not like that 1.4 million is going to stop growing on your retirement date.
As one get older, you want to downsize due to raising real estate taxes, and you don't want to spend time cleaning and maintaining your house. A small Condo/Co-Op apartment with elevators is ideal, you have a Super to take care of issues, and management to take care of paperwork.
In some of these videos, they break retirement into three stages that apply to most people.
The early retirement years, when you still have decent health and energy, they call those the go-go years. Then you move into the slow-go years, and finally the no-go years where you’re traveling is limited.
As someone who is planning this process now, we upsized our real estate dramatically.
We now own a resort in a touristy part of the country called Door County Wisconsin. We have plenty of room in our 3,000 square foot ranch for adult children, grandchildren, family, and friends to visit for a day or a week, hunt and fish on our private land with spring fed stream and private pond, ride side-by-sides on private trails, work on hobby equipment in our own mechanic shop, split cords of firewood, use a compact utility tractor (some call these a hobby farm tractor) with a gaggle of attachments, build wooden items that are simple with the younger grandchildren to more involved with the adults, host gatherings and more.
My estimate is we will be able to self maintain this resort throughout our 60s, then downsize once it becomes too much.
Until then, we love hearing about our grandkids begging to go to mamaws and grandpas place, and they often win.
condos have a real problem with dues..Read articles, they can go way up if major work needed to be done..but a regular home you can just limp along..
@@DougAlesUSA My last vacation was in Door County Wisconsin. It was beautiful in that area. I loved the lighthouses. We stayed in Ephraim. Walked a lot in Peninsula State Park. We will be going back to kayak.
If they can keep their income below the income threshold, healthcare via ObamaCare would be a small cost until Medicare starts at age 65. For example, I retired at 62 and our BlueCross Gold policy is less than$200 per month, without Obamacare that policy would be over $2,000 per month
Yep. Damn good thing Biden got in.. 🍻
I’m 58 and the wife 54 , we were quoted about 300 a month for Obamacare if we kept our income down low enough. The subsides you get make it super affordable. I am wondering why the FA in the video never mentioned Obamacare. He said a couple would need to budget 24 k a year for healthcare related expenses. That number seems really high to me if your on Obamacare. Am I missing something?
I retired at 44, life is too short..I have enough money to last me to 75. Good enough life for me.
Have you made any investments that help fund your retirement?
@@harism2001 I had saved aggressively for 25 years, invested in all equities across the globe, as well as commercial real estate, and infrastructure projects such as solar power farms, bus lines, hydroelectric dams. the buy in on his alternatives is high, but return 12% per year.
@@jeanpauljeanpaul2530 nice. through etfs and stocks?
@@harism2001 individual stocks, no ETF, they have a fee, the alternatives and real estate are bought with a group of individuals through a portfolio manager.
Now that inflation is running rampant you’re good to less than 75 unless you invested well. Put another way. Never confuse quitting your current job with retiring. Hope you’re doing well
If you’re 58 I really feel good about myself. Thank you!
We both retired at 55. Work sucks. We never had kids. We have a nice home that's paid for. Low property taxes here in NC. I receive $2343.00 in SS. My wife is a little less. We do just fine. We don't have to touch are investments. I knew how important it was early on to work all I could to get that SS check at 62. Tons of overtime. Sometimes a 2nd job. We maxed out are 401-ks each year. Life is good. Nothing is free in life. Nobody gave us a dime. You must work. And lots of it. That is unless you want a small SS check. It's your call. Have fun.
Do your own research to plan your retirement. If you spend a little time each week over 30-40 years you can figure this out. Lets not pay someone to further deplete our accounts/hard earned money.
Delaying SS to Full Retirement Age increases the sample couple’s probably of success from 86% at 62 to 97% at FRA because it means the couple would work the additional 4.5 yrs, which means they will continue to grow their savings (assuming they stay employed) and not dip into them and increase their retirement account balance. What the model does not take into account is, the couple’s stress level from working will continue for 4.5 yrs as well as delaying their ability to get better fit (job stress, over-eating, not much exercise, etc) which may adversely contribute to a shorter lifespan, IMHO. In addition, I’m not clear if the model takes into account that as we age into our mid to late 70’s and into 80’s our level of day to day spending will decline.. go out to eat less, take less trips, stay at home more, etc. so the original $60k base year living cost can potentially decline. :)
take retirement early, unless you live well into your 80s your will come out behind by waiting
Agree, Enjoy life a little while you have your health. You can spend much less when you are older.
If we had Universal health care like all other industrialized nations this wouldn't even be a question if this guy could retire at 58 with that much saved. I'm taking my retirement wealth to another country at 62.
You'll see then that healthcare under universal systems are lower quality and raises your taxes like crazy, enjoy sitting in an er for 8 hours just to be told to go and pay for a private clinical care because they don't have the resources to help you within a reasonable amount of time. Then you'll end up paying for private insurance or paying big medical bills per visit and paying ridiculous taxes at the same time to pay for a useless and incompetent health care system. May not believe me now but you'll be humbled by your experience. There's a reason over 90% of health care innovations happen in the US.
If universal health care was so great every where else , why does everyone com to the united states ? 🤔
Yeah ?? Who do you think PAYS for that ?? Gimme a break.
@@rds990 that guy is a troll
@@commonsense5555 There's also a reason why 90% of people who have medical debt in the US start a GoFundMe. I'll take universal healthcare thanks.
Can you Retire at 58? Bro you can retire at 38 with 1.4 million.
@@ccc-qo6ls of course you can, if you are genuinely frugal and not frugal by the ridiculous North American definition.
If you have a below average at least in my terms 5% return a year... thats 70K a year. Many people don't even make that with a mortgage and family to raise.
@@cheynebest7028 amen. Yes!
Of course you can.
Most people forget that retiring doesnt mean committing to no income and only spending money. I can guarantee that anyone would enjoy working a couple of hours a day/week. most people enjoy teaching, art or music, especially when they are older. And usually, if u had any kind of career, by the time u retire ur hourly rate for consulting is really damn high. My mom is retired but still sells self made stuff here and there. it's not tons of money but even just a couple 100$ a month go a very long way, especially if u enjoy making those dollars. On top of that, such small side income is usually tax free. at least here in germany. so when people calculate their retirement age, they usually forget simple details like that and end up dying with tons of money left. sure it's nice to inherit it to your family, but if u did everything right, then they won't need that anyway and u wasted a bunch of time earning that money.
Oh, you got me. I knew you were probably selling something.
We all need a job. Who wants to work for free? If they save you tens of thousands of dollars, don't you think it's worth it?
Yeah this is a sales video really for the well off
@@bruced.370 who buys annuities in a low interest rate environment. Plus the fees .
@@jonathanwallace6667 smart people that want to defer market risk to the insurance company. If a client is looking for lifetime income, why not essentially use part of the portfolio to create a "pension"? An annuity is rarely purchased bc of interest rate (shouldn't be) unless competing w a cd, etc.
The flaw in your analysis, just like 99% of financial planners and tools, is that it doesn't take into account a decrease in spending as we age. I've written my own financial planning software to allow for a decrease in spending and the rate at which one "runs out of money" is considerably decreased. This too with 1000 Monte Carlo analysis. Not to mention a mortgage payoff, other debt payoffs, etc. To the person who's data is being presented, you can 100% retire at 58 with a 1.4 million. Go for it
Nothing in life is 100 percent certain. Except death and taxes. Probable yes. 100 percent certain no. He might retire, then next week find out will be raising a grandchild. Or his investment in DogeCoin went down the toilet.
@@chessdad182 True, but he could also win the lottery. Anyone who's 58 and amassed 1.4 million in retirement accounts isn't dumb enough to put a bunch in dogecoin. Obviously you're not familiar with retirement planning, multiverent analysis, and Monte Carlo simulation. I would bet $100,000 that he'll be okay if you want to take the opposite position....
@@jeffraines414 I guess you are a genius. Give yourself a pat on the back. And anytime you want to play a game of chess, let me know. I would like to see your genius in action. And oh by the way... I bet my earnings are far beyond yours.
don’t play chess against a guy with chess in his screen name..also, is your software available somewhere?
Would like trying out your software if available, and Thanks
you have to have both social securities, you and spouse, to supplement a 1.4 mil nest egg if you want to retire at 58 or 60. In year 2023 and beyond, and assuming you'll live until 88 or 90, 1.4 mil alone won't get you through 30 years of retirement, 20 maybe but definately not 30
Move to Florida, buy three duplex housing units (6) rentals, and you are set for life! I am retired and half my income comes from paid-for rentals and I live like a king on $60,000 net a year. Half my income is disposable or fun money (travel and entertainment) and my investment and rental income generally tracks with inflation. (I "banked" well over $100k last year - appreciation/inflation). This game is NOT calculus, it is 4th. grade math. Know your market and understand the FED is in the dollar devaluation business. Cheers! Note: I'm 70, market up I don't care, market down I still don't care. People always need a place to live and most live hand to mouth and will never save enough for a down-payment.
Im 23 from the uk but would look at doing something similar to this later on down the line
If you want. You decide. My take? Wait ‘til you’re 62 then file for SSA. You earned it.
I am 62. I currently live on 37.5% of my income. In retirement I plan on reducing that amount a bit. I hope to have ~ 7X my annual income accumulated and retiring at 65. I plan on longevity of ~ 85 years (based on family stats). I also have some real estate, but I don't count that as it may crater anytime.
$86k annual withdraw at year 1, increase that withdraw by 2%/year (inflation rate), your withdraw at year 20 will need to be $125k. How is this guy coming up with $186k?
4% of 1.4 million is 56k annually.
He said medical expenses are 8%/year
his advisory fees make up the difference (jk)
Good advice based on this use case.
Anyone can retire at anytime. Lots of variables and risks. No matter how you crunch it, there are factors that circle back to nothing more than luck. Some are forced to work well past the average age and some continue to work because they like what they do. I am aiming for the middle. I’ll keep working but only when and as I want to with no dependency on work based income.
Everything depends on your lifestyle and willingness to downsize it if needed to live on what could quickly become a normall average wage.
It doesn't matter how much you have saved. It's only relative to how much you need. I live in a very high COL area in California and fortunately my wife and I have more than enough saved. Someone, like my aunt however, who lives in Alabama in a paid for manufactured home on land she owns needs very, very little to live on. It's all relative.
Mike, so the key is to work in California and then retire in Alabama and you're good to go!
@@GrnXnham Point taken but I'll take my chances anywhere but there. Nothing against Alabama other than the heat, humidity and bugs.
No one can answer that question if they don't know his monthly expenses.
Sure you can. You determine what a reasonable monthly or annual income would be and if your expenses are such that you can live off of that income the yes, you can retire at 58. If not, then you can’t. Unless you can reduce your expenses.
True: a person's monthly expenses are important, and vary from one individual to another. And we get to know our clients' situation, goals, dreams and retirement vision before we customize a comprehensive plan for them...
@@OakHarvestFinancialGroup no. You start with expenses first.
It’s not that complicated. No mortgage, no car payment.......yes, that’s enough.
I retired at 55.......seven years ago. I still have the same amount of $. Actually, a little more.
1.4 million, no debt and 36K/year incoming in 4 years, yes you can retire, if not you will never be able to retire. Have a large cash balance for living expenses, keep your "income" low before you hit age 62 and qualify for medicare. The program typically doesn't look at assets, just annual income.
You mean Medicare or Medicaid?
@@slomo4672 Oops medicaid.
Thanks for joining in on the conversation...
good luck with that plan.....
@@TheGregWallace Been working so far.
No you can't retire. If you're not bright enough to figure how how to retire on $1.4 mil you should keep working so there is someone to tell how to live. Being retired does require some understanding of the world.
perfect!
Doesn’t this assume the you put this plan in place and never change it for 30+ years? If your FA doesn’t advise you to make little changes based on what happens over the years. If your FA does not do this, find a better FA.
Really? 1.4 Million and you're asking this question?
This pisses me off!
This is a perfect argument for Universal Healthcare. These Healthcare costs are highway robbery.
You think Healthcare is expensive now, just wait until it's "free". Competition and less government involvement is what's ideal.
1.4 millions is enough to retire at 58 if your house and car is paid off but u have to consider health insurance as well because at that age it’s not cheap and it’s gonna keep going up. The older you get the more health insurance you gonna need because if you ever get seriously ill that 1.4 millions will be wipe out quickly.
@@gregh7457 That's what I did.
That’s why you bury some untraceable gold
"Very frugal" = spending 60k per year? Not how I define frugal.
Agreed
depends on where you live i guess. some place you can eat and drink air and itll cost you that easily.
60k is nothing. Frugal is about 125k a year
@@Drogers8675 maybe in San Fran 🤣
@@Wealth_Wisdom_Discernment I have a 400 pound wife and she needs to eat
The financial institutions want you to live off the interest of your investments while they can continue to make money off the principal. It's your money, use it.
If his home and car is paid then 1.4M is more than enough for 58........
Even 1M is still enough for the 2 of them
It all depends.......maybe for you but not someone else.
Pampered life style no. They won't starve.
I'm 49 and will retire next year. Expect to have 1.9MM. 800K in stocks.
You can live like a king on that much money. Lots of people live fine on $25,000 a year.
So I guess this is just a sales pitch for annuities.
@@jasonjmarchi Jason the first part of your answer makes no sense. If 200k is all some has when they retire........they have no business retiring. This vid is about retiring not how much money you have.
If you have to ask someone else if you can retire, then the answer is "no". Only you can answer that question. There are professionals and resources that can give you the tools to help you answer that question, but the cannot answer the question for you...
Because only the RMD is taxed at normal tax rates (tax bracket!) in the year it was withdrawn the remaining capital assets can grow tax deferred in the future.
Remember the humour: " There is a penalty for early withdrawl ! "
This factor has to be taken into account !
Don’t forget... as people age spending goes down and I think this video should reflect that.
Exactly.
So true...
I keep spending more...😂😂
I don't see myself at 78 needing 60K a year to live. So yep, it always seems like they are always forgetting to mention that the older you get, the less you will need!
Not necessarily. At 72, & retired, I find that I spend just about what I did when I was working. Just on different things.
I knew that annuity pitch was coming.
Your drawing your money for 20 years before you start using their money. Figure in interest and even longer, what a joke.
So complicated. It's hard to predict as there are many scenarios that can happen. Just inflation and changing tax rates can throw a curve. Then the stock/bond market can be very unpredictable.
Yep, it's complicated. So, running 1,000 simulations can be a starting point...
There is nothing complicated about it.
We’re retired and do just fine on $28,000 a year. We’re debt free and we save my disability income for extra expenses. I have life insurance on my husband and myself in case something happens he will be financially fine. We have a total income of just over $60,000. If they’re spending $60,000 a year and are frugal I’d have to think they’re not debt free.
For their case, your health care numbers are just wrong. They will qualify for large ACA subsidys if the 60K income is valid and it probably is. Their premiums could very well be zero. They should wait on Social Security till 65, when Medicare starts. Their tax rate will be low, so IRA/401K money should be used initially. Forget the annuity stuff. Keep control of your money...read that its YOUR MONEY...
@@cooperparts I would qualify if you are in good health, ACA can be cheap. As you are right that it has high deductibles, compared to Medicare. I have a HSA eligible ACA plan and a well funded HSA in case of a serious health boo-boo. But in 6 years of ACA, I have barely touched the HSA and will start medicare in a few months.
@@cooperparts So does company insurance when you factor in max spending if going to a hospital, etc. Just save what's needed for the deductible and take the free insurance.
So if you have these advisors managing your “plan” don’t you have to pay them say 1% yearly of your investments account. Or is there a flat fee? So if you have 1.4 million you have to make enough income to also pay them an additional 14,000 year to manage your plan? So does all this planning take Into account the payments to the financial advisors?
This sounds like a fear mongering financial analysis. Just a few flawed analysis that I have observed from this video:
- TAXES: If this couple only draw $60K/year passive incomes for living expenses, they will not have to pay federal taxes ($60k income - $25k standard deduction = $35k taxable income). State taxes based on $35k taxable income would probably come in under $2k/yr (0-7% effective rate for SC).
- MEDICAL INSURANCE: $60k/yr incomes would definitely qualify this couple with subsidies from Affordable Healthcare Act that should result in less than $500/month (
Exactly! This is we're at and agree with your point. Also; If you carefully invest a portion of the funds through a an IRA you can fight inflation, Roth is optimum.
Good analysis and strategy. I agree with most of what you say. The only issue I would say is getting 6% return is fairly high (it is certainly not conservative) and can be inconsistent year over year. A 20% correction is not unheard of, and can (and will certainly) happen in the first 4 years (58-62). Expecting a +30% return on the other side in the NASDAQ for example is simply playing with fire -- even if they are happening over the last decade.
@@michaelrp88 _ Yup. My retirement plan is simple:
- Home mortgage paid off before pulling the plug on my 9-5 job. Without the mortgage payments, $60k/yr would be very comfortable for us.
- Delay collecting SS until FRA. The SS annuity payments increase roughly 10.6% each year from 62-67 (8% increase + 2.6% inflation adjustment every year). Based on the SS calculated payments for my wife and I at FRA, we will only need about $12k/year of supplemental incomes from IRA/401k accounts. Of course, ROTH will be best to avoid being taxed.
- Maintain a 5 years of annual expenses in cash values/money markets and/or CDs "bucket" to allow the market to recover (if needed) without touching the investment amounts.
- Park my investment amount in a S&P500 index fund (FXAIX or SWPPX). The strategy is to ONLY draw funds from investments if the market is in positive returns. During the negative return years. Leave the investment amount untouched allowing time to recover. Hence, the 5 years of expenses bucket is reserved.
After collecting SS incomes at FRA, we only need $250k in the S&P500 index fund to make up the $12k/year supplemental incomes for the next 30 years. Worst case scenario, we can always sell our house & use the gains for additional retirement funding.
@@sred5856 _ If we use the "bucket" strategy in which 5 years of expenses are reserved in cash values/money markets/CDs to allow the market to recover during down years, we should be somewhat shielded from market volatility. I ran the numbers starting from 2000 when the markets (using S&P500 index) were down 3 consecutive years (-10%, -13% & -23%) and then down again 9 years later in 2007 at -38.5%. To generate $32k/yr supplemental incomes from $1million invested in a S&P500 index fund with a 5yrs cash values bucket would be a solid plan not to run out of money before reaching 100 (which I doubt we would get there).
@@theextendedfamily4215 , what is your rationale for only having funds in the S&P 500? If you choose more and diversified funds, they may not all experience similar losses, if any.
For us, a 2.5% withdrawal rate wouldn't be enough to accommodate our desired travel.
I'm 63 and lost my job during 3 oil and gas downturns in 5 years. I had 180K and a 80k year job at 55. Then my house was destroyed in a flood. Then my wife divorced me for nothing, lied to the court, and left with the gardener and took the rest. My parents got old so I take care of them. Nobody will hire me at 63 when they can pay 20 year olds $15 an hour. I have 18K in an IRA of what's left of my old 401K after raiding it when I was laid off before 59.5, had to sell my car, then my kid got sick. I have no insurance. I live out of a suitcase in a garage. I have an Ameritrade account with 5k, that's about it. How much should I take out of my IRA for the rest of my life at this point? I figure 20 bucks a month...enough for a sandwich and a beer every week. Maybe some new shoes would be out of the question. My point is, sometimes, you can work and plan for 45 years in a great career and it can all end within 3 years of retirement due to things you can't control. Just make sure you brush your teeth and take vitamins and buy 4 bullets. The end.
If you can drive do food delivery with DoorDash and Uber eats. You can easily make $100 or more in 5 hours a day.
Sounds like you could write an album of country songs based on the story of your life. Seriously, I hope things look up for you soon.
Don't get married. If you are already married "unfortunately", best hope not to get divorced. I'll stay as a single, happy and $1M in my bank acccount
All you can do is plan for the worst and hope for the best. Not everybody's plan works out. It is what it is.
@@davefoster2962 Same here.... DO NOT MARRY !!!
If you can’t retire on 1.4 million you really need to re-evaluate your spending. I could retire today on 200k!!!!
Thanks for watching and commenting.
Many people aren't accustomed to such a limited lifestyle.
Sure if you want to live out the fear of your days eating like a monk and live in your car.
@@MisterMister5893 which car? :P
200k to retire? thats the funniest thing i have ever heard
It occurred to me, Troy, that you should develop your own software to overcome the limitations in the current iterations. 😀
Unless I missed it, I didn't hear planning for assisted living/nursing home care. All fine and good if you are debt free, but when you are unable to care for yourself and your children cannot take care of you, the costs for care giving can wipe out even the most substantial and secure nest egg.
The answer to this question is quite simple. If you can continue to grow your net worth by a rate that beats inflation while retired, then, yes, you can retire.
Chances of both of them living till 90 are very slim. Also, when you don't have large income health insurance isn't expensive because of the obamacare.
I noticed he doesn't mention that....He's not focused on details
first of all, realistically there’s an age at which you should let the rest of the world worry about you. in other words, start living now while you can and quit worrying about being really old and broke.
@@BCS2023 Seriously? I plan to take care of myself. It's not "the rest of the world's" job to take care of me or you. And as part of "the world", please don't count on me to worry about you. Not happening. Make a plan. Live on less than you make.
I have retired several times, but well, you know the rest.
I would volunteer on mothballed warships so if Aliens attack the volunteer hands can go to general quarters and save the planet just like in the movie "Battleship" but as I am ex Royal Australian Navy I will have to make do with subs or patrol boats, that is about all we have mothballed.
I was told that my wife should take Social Security at 62, and I should wait until 67. Why you might say……well when I take my SS at 67, my wife’s SS then increases to 50% of mine. Is this correct ? How do I have a consultation ?
First it is not in the best interest of the so call financial group to tell you when you can truly retire so they can tell you to keep working and investing with them so they keep getting commission from your retirement money, sorry just fact!
yup
well a thoroughly laid out spread sheet should say enough.
super helpful analysis by going through these "scenarios". It helps put the principles into context
I really don't know what to think when I see these things. 58 with 1.4 million and don't know if he can retire? At first, i thought how ridiculous. But then I thought he might be used to driving Lamborghinis, not Toyotas, and he might be used to 5 million dollars home instead of 159,000. And he might used to eat out every day at 100.00 a plate restaurant, instead of Olive Garden once a month. He might be used to vacation at the French Riviera instead of, say, Gatlinburg. So, yeah, he might need more money. The rest of us retired at 62 with social security and 60K. And yes, some investments. Am 65 now and doing fine.
Annuities benefit the advisor more than the client so you must not be a fudiciary.
Wayne you are incorrect. You need to do more homework.
I highly doubt they will need 60k by their mid 70s
Yes. Simple answer to basic question.
If this guy can live on 30k per year, he will be fine. I am taking SS at 63 ( retired at 62), so I don't need to take out as much from my 403b and IRA. The break even age for SS is about 80 years of age.
I am not going to watch this video, but just based upon the headlines of the video, the answer is HELL YES YOU CAN RETIRE. The real question is what life style do you want to maintain in retired, where do you want to retire too and do you have any debts that determines everything. Don't even need to worry about healthcare as we have a safety net called Obamacare and last of all Medicaid if you are really poor.
You won’t qualify for Obama care if your on social security…. Why do folks keep saying that…
@@The52victor The person is 58, so until 65 you don't get medicare but use Obamacare.
In some states you cannot get medicaid unless you are under 18 or pregnant. ACA is definitely worth considering.
@@The52victor If you are not old enough to get Medicare, you can get ACA depending on income.
"Deferred income annuity" And SS is the best deferred income annuity. And it's inflation-indexed. Why in the world would you take SS early if you then want a deferred income annuity???!!!
Good point- gov pensions satisfy the need for annuitized income- invest for income w the rest. Live in the income and let assets grow- apple tree farmers figured this out long ago.
I'd like to retire or work less in 5 years, and I'm curious how others split their pay, how much of it goes into savings, consumption, or investments; I earn roughly $250K per year but have nothing to show for it.
I could have answered the question and explained it in less than 5 minutes. Running out of money is not even an option because before that happened, you would return to the workforce or start a business.
What?
I’m 60
I have no debt. House paid off
I make $54k a year
I have $30k in savings.
I feel rich. LoL
@@carlkpsplucky5554 no, but my name is Carl too.
No I spent my whole adult life paying child support. And I have traveled the world.
I have a $2500. A month take home
Govt. pension for life. Should collect SS
Starting in 21 months. Can’t wait.
Don’t know what TSP is ?
Feeling don't pay the bills.....
@@carlkpsplucky5554 yes. Spending is my only worry
I am old and retired and I can tell you one thing. Financial advisors and or planners are useless. Had two now do my own and make 50% more then I ever did with an advisor.
Hello Chas. Thanks for stopping by.
you must be real old....
You have 1.4 million dollars and you don't know if you can retire? SMH
seeing the medical costs makes me thankful that i live in a country that has free at the point of use health care. its fascinating watching retirement planning for other countries.great video by the way
this is an age old debate. I'm an American who has worked with many Europeans over the years. The "free" healthcare in Europe is paid for by taxes that are 20-30% higher than they are in the U.S. So it isn't really "free". Personally, I find that the government does an awful job with everything they touch. I'd much rather keep some of that tax money and spend/invest it the way I want. That includes saving money for retirement and for healthcare during my retirement years.
@@JM-io4vb i never said it was free. That’s what I love about social media people not actually reading and understand what they are commenting on.
@@mwscuba Hi Mark. I wasn't slamming you. Sorry if it came across that way. In my defense, you did said it was "free at the point of use health care", so it does kinda sound like you're saying it's free. Of course, nothing that any government provides to its citizens is "free". My European colleagues were very unhappy about their tax rates (which is used to fund things like the medical and education systems), and this is something that most Americans don't understand when they complain about having to pay for medical insurance.
@@JM-io4vb in the UK it is “ free at the point of use “. I go to hospital and don’t get a medical care bill 👍🏼 but it is funded through tax, so any UK tax payer ( so basically anyone earning over 12.5k ) will fund health, they also fund other stuff like schools, road, benefits for people and the old.
Yeah you can keep your European healthcare!
This scenario does not take into effect that as you age, you spend less. It’s not a straight line upward.
Nailed it even with increasing healthcare cost as you age
After I retired, all my costs went down. It all depends on where and how you live.
I don’t get it.
I don’t get it at all.
These videos, every darn one ask how soon can you retire and never run out of money.
The assumption is always the same, you want to retire as soon as you can, like working is equal to serving time in prison.
I’ve had this discussion with many, including my late father who made it clear to me retiring was the worst decision he ever made.
He tried golfing, didn’t like it any better in retirement then he did during his working years. Tried traveling, same thing. He loved working and hated retirement until the day he died.
When I work, I get to visit my friends, I travel on the companies dime, they give me a nice truck, phone, insurance, expense account, and people want to meet with me. They don’t make me stay in budget hotel rooms or eat fast food.
This past Saturday we traveled as a couple, stayed at a large hotel with banquet facilities where I was master of ceremony at a large formal gala. We dined, drank, gave appreciation, awards, told stories, jokes, socialized and danced.
Loved every second of it, and the calls and messages of praise just keep coming.
Why would I walk away from this to sit in a rocking chair to watch tv as I wait to die?
Our current president is 80 years old, and the previous one is 76 and he might run again. Do you really think neither can afford to retire?
Why not find a job you love? You’ll never need to retire and every day is a blast.
Without a financial planners spreadsheet analysis, I already know I have plenty of money to retire. I just don’t want to.
I’m surprised that equity in a home or property weren’t included as I believe that would help if included in assets. The other item is that as a person ages their spending would naturally taper off a bit.
How so? You have to sell your house to get at the equity or take a HELOC which creates another debt and monthly payment
@@chrisp3913 equity in your primary residence can be a big help in the later years of life. You do still need a place to live but that mortgage free home can be sold when you no longer want or need it. Those proceeds can fund a lot of rent for the last 10-15 years of life and leave a lot left over to live on. It's just another asset that can be pulled from, but you do have to be honest with yourself about the fact that you will still have a dwelling expense of some kind. Some are living in a much nicer/larger house than they need or want to maintain. In those cases a downsize can produce some nice low tax income early in retirement that can be invested for future use.
1.4 Mil in Qualified Dividends in Dividend Kings and Aristocrats at 5% yields 70K and the Tax for a Married couple on Qualified Capital Gains is 0% under 83.3K so even with the Dividend Hikes you wont pay ANY Fed Tax for 4-6 years and the 83.3K will go UP over time also.
Only in America can people incapable of performing 4th grade arithmetic accumulate $1.4M dollars. Is this a great country or what?
If I had lots of cash, the last thing I would do is tell anyone about it.
That is probably the case. With his wealth, he has done everything he wanted to do. This is the last thing.
Exactly. And certainly not a Financial Advisor who needs your commission to survive his own mistakes.
@Haary Jing
Girls can finally cash-in on dudes oogling her, worldwide. Every hot girl is going to get rich just for existing. Its a new world.
@@FFE-js2zp this is the most real truth I've read in quite a while. You are absolutely correct.
That's the problem. Most people are natural motor mouths. They absolutely MUST brag about having lots of money!
They can sign up for AHA until Medicare and since they won't be working it will be heavily subsidized so where in the world are you getting that $23k per year healthcare cost?
Exactly. We live on about 40 to $50k per year in retirement and that includes a 7 or 8 week trip overseas. Anyway we spend about $10/month bronze plan premiums and our average out of pocket costs are around $2000. Now we are in great health and can afford the "risk" of a bronze plan. I think $23k/year is a bit overkill even if you had poor health and a higher level HC plan.
ACA. If you have your retirement investments well positioned to generate modest income you can likely purchase a silver plan with reduced or no deductibles for minimal or no monthly premium. If you understand how ACA subsidies and cost sharing work it's an excellent early retiree financial hack.
@@DillyPutty Yes that is mostly true and I know others who have done exactly that. However when I looked into the Silver plans (with cost sharing reductions) in our Zip code, the price jumped from $10/month to $231 and the max OOP fell from $7000 to around $5k. In other words it wasn't worth the extra cost. Now if we lived just 40 miles North of where we do now then the Silver plans dropped to $91/month and the deductibles were much lower.
@@DillyPutty Note also in Jan 2022 the ACA is being improved such that you can go to any out of network hospital in an emergency and ONLY be billed at your in network rate (i.e no out of network "suprise" bills). Thus its reasonable for us to buy the SILVER (CSR) plan and travel 40 miles to see our primary, knowing our local ER is out of network.
@@frankish5314 Yeah, your milage may vary based on personal and local factors. Took me a bit to figure out the best options for our situation. Also going forward who knows what will happen with ACA. With our current overpriced healthcare, unsubsidized coverage could run a couple near retirement ~$2K/month.
Here is a salesman trying to sell a high priced annuity with a fat commission.
Yep. Lots of these "wealth management" groups on FB. Mailing out tons of "free dinner" flyers. All pushing the same crap -- fixed index annuities. There is a reason no A++ insurer sells this crap.
And it’s almost disguised as free advice. The tone and demeanor were my first clue. To be fair how else do you make money in this line of work? It’s nearly free for anyone to read about money management and know everything there is to know. So these businesses have to concoct products to sell.
I would ask out of the gate if he is a fiduciary.
Right? This advice plans to be poor, never understood a plan that assumes using up your assets by death. Why not arrange tax free or tax advantaged income and leave the assets alone? What are the odds if you never sell your principal in the S&P 500 not in directly held real estate? Think rich, not poor, and you can do this at 55 w 2 million. If you line frugally, maybe even less. Nothing I this video explains how this could be accomplished. Just fear of loss and a pitch to buy an insurance product.
@@velodjk2975 It's a good question. I'd rephrase it to "is he only a fiduciary or a fee only fiduciary". A lot of these "Advisors" can legally claim to be a fiduciary, but wear multiple hats. They just simply take off the fiduciary hat and put on their insurance salesman hat on and its disclosed in the many documents you sign.
How much are the fees? Give me some examples.
These financial advisors want 2 things always. Work longer, invest more. Nope. I'm 43 with a around 800 between my wife and I in investments and cash. 2 Roth IRAs, 401k and a STRS plan. I'm ot working past 50. At least not in a career. If I'm working somewhere it's because I want to.
Sure hope you're right, but if you end up with $1 million and retire at age 50 and there are 2 of you - you better plan on living very, very simply or dying young. A single individual close to me retired at 58 with $1 million and no debt (house paid off) AND has a small pension. FA recommend he live on $35k/year...tougher if there are 2 of you and you plan to stretch it another 16 years (age difference at retirement x2 people). Would make me very uncomfortable, 'cause I don't know what job I could get if I run out of $ when I'm 75!
I am fortunate to have a pension, although meager, plus 403b assets. No need for annuity. If I didn’t have a pension I’d buy an annuity. This dude is pretty spot on.
If he’s single, yes. If married, doubtful.
I agree.
"No fault divorce" and the fact that 70% of all U.S. divorce cases are filed by the wife means that you need to spend some time assessing the risk of getting remarried.
Hopefully when you get divorced you're still young enough to recover financially.
If you split up late in life though, it can really hurt you. Your wife can find a new beau and take 50% of your wealth and there's absolutely nothing you can do about it, and 1/2 your life savings is gone.
Very few men in U.S. society are accurately accounting for the huge risk of getting remarried. it is not worth the risk.
Everyone should try marriage when young if they want. BUT NOT A 2ND TIME. After you are older, you just do not have the time to financially recover from losing 1/2 of your nest egg.
Predicting anything right now involves a degree of faith that the political and financial system will remain as it has. It won't.
It never has and never will. Faith doesn't enter in to it. If you plan your financial health on faith you're not to bright. Knowledge is a better source.
So do nothing then lol
I would just invest the 1.4 million in a diversity of companies who pay at least an 8% dividend annually. So, Every 3 months I receive a dividend investment payment for $28,000. $112,000 per year or $9,333.00 monthly. Taking your 1.4 million and essentially living off of those principal funds until they run out is stupid!
Agreed that living off the $1.4 million dollar principal is not smart. It is also not wise to invest the entire 1.4 million in the market. When retired, or close to it, at least 33% should be in a “safe harbor”, not the stock market. This used to be CDs, alas no more, so cash is now king. Stocks that will continually pay an 8% dividend???…not realistic at all. Most pay between 2-6%, and there is always the risk that the company can change the dividend return, and/or the stock attached to the dividend could drop in value, and the dividend will then be reduced as it is based on one’s holdings with the individual company. Depending on a continuous 8% return? Now that’s stupid.
@@lisav8443 You are assuming too much. I own real-estate and dividend paying stocks. It has worked out just fine.
@@lisav8443 Also I have dozens of good solid company's that pay over 8% annually.
@@SteamEnginesUSA Please be so kind as to tell us the dozens of "solid" companies that pay over 8% annually? The benefit to you is more of us will invest in these companies bringing your value up even higher!
@@danah.320 Well MO, BTI, IMBBY, pay 8% or right close to it. All are tobacco companies. But I do agree with you that throwing all of that 1.4 million into dividend stocks is risky. I'm not sure I would do that.
There is a strategy to account for the down years in the market that is fairly simply but not perfect (nothing is). The Market "On average" recovers from any down turn within 3 years. You do NOT want to be forced to sell your stock portion of your portfolio during the down years as these are the very investments that will recover and provide bigger gains as they recover. However, you still need income during this time. So instead of having the typical 60% Stocks 40%bonds in early retirement (roughly your 60s), keep the stock allocation for stocks up around 70% and have 3 years (Minimum) roughly worth of your portfolio in the bond/income side. When the market is doing well then sell and pull from the stock side and during the down years ONLY pull from the bond/income side making sure to replace this as the market recovers. When the years are down you could also work part time or even cut back expenses if need be. I do not like annuities and I do not think they would be sold as agressively as they are if the seller were not making a LOT of money!
This is my plan exactly. My financial planner has me set up this way and so far so good. I do figure a downturn in the market here in the next year or two with Brandon er I mean Biden and his idiots in charge.
Wow, what a difference a few months make! 2% inflation?
Why would you need that much money to retire 60K a year? My goodness I'm 58 and paid off my 209K home at 55. Cars paid for and don't have any credit cards. People just live to high and mighty. My property tax for a 1650 square foot home and the lot I own beside me together is 900.00 a year. I could be just fine with 2000 a month and do the same thing I do now. Plan to retire at 62 with a 2400 a month SS check and around 200K. The problem is people retire in dept! Had a friend retire in about the same situation and he's got a better health plan that I do working for a company with 230,000 employees. He pays like 157 bucks a month using the ACA. Hospital emergency room cost him 750.00 and his meds are like 5 bucks. My bills are like a 1200 dollars a month and that includes food. I doubt the majority even come close to having 200K saved today. People just spend way to much money! Insurance it not that expensive if you keep your income down and user the ACA plans.
OF COURSE you can.
Don't overcomplicate this stuff.