How Much Money You REALLY Need to Retire | Financial Independence Is More Affordable That You Think

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How Much Money You REALLY Need to Retire | Financial Independence Is More Affordable That You Think:
Saving money for retirement can sometimes seem like an unreachable goal. In the modern day how is anyone realistically able to put away millions upon millions of dollars to secure their financial future. It's certainly a difficult task, but what if I were to tell you that you may not actually need millions put away in order to retire? Let's discuss why you may not need as much money to retire as you'd initially think.
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29 июн 2024

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Комментарии : 210

@Will67267 Год назад

I retired in Mexico with a $500,000 nest egg five years ago , living large on 2500 a month . Much better than the US.

@NextLevelLife Год назад

Geographic arbitrage can be a highly effective strategy for the right person, for sure! I'm glad to hear you've managed to make it work well for you. Thanks for sharing :)

@ThePCgamewalkthoughs 2 года назад

Been poor once already in childhood. Been saving since I started working four years ago and was able to help my family get a house with money down and finally I can start investing next year with plenty left over. I will not be poor again in my retirement years. It was hell.

@Maxvr9999 2 года назад

Important addition: If you invest p% of your income then you are used to a livestyle that costs (100-p)% of your income. Once you no longer invest and decide to live off of it, you won't have to all of a sudden live off of 100% of your prior income to keep supporting the former lifestyle.

@saqibzaman1476 2 года назад

Exactly

@shaereub4450 2 года назад

I live on about 50% of my income.

@michaelswami 2 года назад

I think the video addressed that.

@MrPennstate2014 2 года назад

This assumes that one wants to maintain and not improve one's lifestyle.

@jasonjstdr 2 года назад

Balance spending to live well now with saving to live well later. Unfortunately, spending too much now and saving too little for later occurs more often. Thankfully, we often need less as we grow older. Good video, as usual.

@NextLevelLife 2 года назад

Thanks! Glad you got something out of it :)

@wastelanddan7388 2 года назад

Great comment

@telwingeorge 2 года назад

Absolutely love your videos... could you please make a video considering 2 important points for early retirement. 1. Medical insurance 2. Tax penalties in retirement accounts

@lauraigla6319 2 года назад

Finally, a resource that isn't fear mongering! Really appreciate this sensible take, thank you.

@NextLevelLife 2 года назад

Glad you enjoyed it!

@shantvincent782 2 года назад

This video was informative and had a positive tone, thank you!

@NextLevelLife 2 года назад

Glad it was helpful!

@MohammedAlHusein 2 года назад

Excellent vid. Thank you!

@NextLevelLife 2 года назад

Glad you enjoyed it!

@stevejohnson2108 2 года назад

Great video and yes it makes sense. Since retiring a year ago my expenses have gone down. Both kids out of college and working (minimum of 50K savings right there). Moved to Florida and bought a great place that was half for what I sold my house in NVA (650K vs 1.3 million) and put the other half in the market. House expenses now (even though both properties are/were free and clear) now are less than half, I would say about 60% less as property taxes, maintenance utilities etc are much less. Oh also no income tax in Florida, another big one. All in all my wife and I made in our last 5 years working on average around 311K per year. Now we make around 202K just from dividends and we are still saving over 70K without even thinking about it.

@NextLevelLife 2 года назад

That's amazing, Steve! Well done :)

@SCP-001DatabaseAdministrator 2 года назад

And that's why a ton of people are starving.

@stevejohnson2108 2 года назад

@@SCP-001DatabaseAdministrator Why?

@platoon1081 2 года назад

Brag...much?

@stevejohnson2108 2 года назад

@@platoon1081 Bragging? Very achievable what I stated dude. Not bragging at all.

@JoseRafaelFiguera 2 года назад

Great Video! Thanks!

@NextLevelLife 2 года назад

You bet!

@andrewb9595 2 года назад

A great and inspiring video for those just starting out. For those who've been saving for awhile it still offers some good things to think about as well.

@NextLevelLife 2 года назад

Absolutely!

@Hawking1969 2 года назад

You simply must take health insurance and healthcare costs into account in these videos. They very much offset solar panel savings.

@Diomedes01 2 года назад

Agreed. When I budgeted and did my projections for retirement, I myself was shocked by how much health insurance costs, even for an individual. Definitely adjusted my retirement numbers accordingly.

@NekonataVirino 2 года назад

It’s interesting - are these videos only for people in the USA - actually given the details i guess they are but i hope you know that that’s only an issue for some retirees - many many countries around the world do not charge people for direct medical costs - preferring to include it as a right for all citizens in general taxation. Therefore for most first world retirees massive medical costs are not something that needs to be factored in.

@autobotdiva9268 2 года назад

Porrugal is $125 mo for PRIVATE insurance for 3 people. 🇺🇸Nope👎

@K5Adventures 2 года назад

It doesn’t hurt to have $aved too much for retirement. I rather have too much $aved in retirement than not enough.

@jayholiday256 2 года назад

You may wind up having to leave early for any reason, so extra money is always nice

@CarlosG2288 2 года назад

It does “hurt” if it’s costing you more time, you are giving up prime living years to save more and more. If it didn’t “hurt” noone would retire and just save all their life until they died

@K5Adventures 2 года назад

@@CarlosG2288 Retirement age (time) is not a variable in this video. So I’m curious how time can cost you? If a person retired at target age 65 yo with a goal of $2.5M saved, but actually saved $3.0M. How did that costed them time and gave up prime years? They still retired at their target age, but with more money then expected. No one is suggesting that you work beyond your target retirement age to save an extra bucks.

@tiad.9142 2 года назад

@@K5Adventures I think they are referring to time such as time that could’ve been spent with family and friends building memories and connections…which is very important, life expectancy drops when you don’t have worth while relationships

@K5Adventures 2 года назад

@@tiad.9142 You are reading too much into their comment. Let’s assume your financial advisor suggests that you save $1,000mo for 30 yrs to achieve a retirement nest egg of $2.5M. But you decided to save a little more than the suggested amount, for example $1,030. You’re saving an extra $1/day than the suggested amount in order to achieve more in retirement than the expected $2.5M. How would saving an extra $1/day affect your time or connection with your friends and family? Saving an extra $30mo shouldn’t prevent you from doing the things you normally do to create memories or build relationships. And if it does, than your monthly budget is too tight. The majority of Americans don’t have enough saved when they retire. That’s because they live beyond their means and/or have the yolo mentality so they have nothing saved when retired. I rather be over prepared for retirement than under prepared. I don’t want to be 80 yo and need to return to work because my savings ran out and my SSA can’t cover my living expenses.

@intoroadsters 2 года назад

Great video, as a fellow Plant Manager that Will be retiring in a few years I can relate.

@kravenofspider 2 года назад

I would say living say somewhat of a minimalist lifestyle, one could factor in a 25-30% reduction as well.

@NextLevelLife 2 года назад

That certainly falls in line with what Vicki Robin and others have found for those who adopt a more frugal, spending-conscious lifestyle :)

@Green__one 2 года назад

The more minimalist your current lifestyle, the less savings you can expect in retirement. You've already cut the fat that they expect you to stop paying later. In fact, for many people who are minimalists now, their costs will go UP in retirement as they try to find things to fill the time that used to be filled with work. There's almost nothing that you can fill time with in a meaningful way that doesn't have some costs associated.

@NextLevelLife 2 года назад

That's true the amount you'll see your expenses get reduced by adopting a more frugal lifestyle will depend on your starting point :) And you're also right in that activities to fill the time when retired can certainly lead to increased spending relative to when you were working (possibly even enough to offset the savings you realize when no longer paying work-related expenses). On the bright side, there are a lot of activities that you can do that cost very little in the grand scheme of things. Things like exploring local parks, exercising outdoors as opposed to at a gym, and creative writing are all great options though there are many more. Balancing these types of lower-cost activities with the more expensive ones can help keep your activity-related costs from growing quicker than you'd like. Thanks for the comment!

@Green__one 2 года назад

@@NextLevelLife some of us have no work related expenses to start with. I am budgeting for a significant increase in expenses when I retire, I simply can't see any reason to expect otherwise.

@darlenekolodziejczak5187 2 года назад

Go live abroad. Your money goes farther if you chose well.

@Arun71150 2 года назад

This ⬆️ ⬆️!!!

@evanhdez 2 года назад

Mexico?

@darlenekolodziejczak5187 2 года назад

Veitnam

@evanhdez 2 года назад

@@darlenekolodziejczak5187 Vietnam is too far. Mexico is right here at the border. Plus I know Spanish.

@Sovnarkom 2 года назад

The Yemen

@saqibzaman1476 2 года назад

Sick video

@NextLevelLife 2 года назад

Glad you enjoyed :)

@choreomaniac 2 года назад

I’d also add two things: inheritance and downsizing your home. 1. If one retires at 65 and die between 80-90, it is likely you will inherit something during retirement. 2. If you had children, it is likely you won’t need the rooms in your house and you can sell and buy a cheaper house. This can add assets as well as reduce property taxes and maintenance. Finally, rental income is a pretty common way to supplement income

@alansach8437 2 года назад

"It's likely you will inherit something...." Yeah, right! More likely you will win the lotto!

@livingunashamed4869 2 года назад

One of the best vids I've seen!

@NextLevelLife 2 года назад

Thanks!

@doggydude4123 2 года назад

I know it was addressed in the video but I can't place enough emphasis on healthcare. Invest in your health by eating less/healthier and working out. Healthcare in the USA is expensive AF. Consider medical tourism to make it cheaper. Also consider long vacations (Visa permit limits) in cheap countries (SE Asia, Greece, Portugal, Spain, Central and South America) to reduce cost. Even move there if you want to.

@mperry36 2 года назад

I love your videos. Thank you!

@gontayybago7850 2 года назад

Me too

@NextLevelLife 2 года назад

Glad you like them!

@jimjensen9139 2 года назад

Thank you! This is the antidote to the financial planners always pushing huge savings which is mainly a conflict of interest. I like the way you have thought through and explain these concepts.

@erinaustin9968 2 года назад

Can show the smile graph adjusted for inflation over time? I’m not sure the smile is so arched. Thank you for your video.

@mofongazosupport8194 2 года назад

Goated thanks

@NextLevelLife 2 года назад

You're welcome!

@Chaseosa 2 года назад

I saw you have a video on financial guardrails but I didn't see that chart that you show here. Is there a video or article on those guardrails from 13:50?

@ttsen9598 2 года назад

How about expense increases? Things like health insurance will be significantly higher (especially if that was paid for while working). Also kids, if you retire early...

@eddieguerrerorules 2 года назад

i wish there was a calculator for this, this is a very good video

@dwalker6868 2 года назад

Thank you

@NextLevelLife 2 года назад

No problem :)

@2007Lynx2007 2 года назад

Hubby and I both have defined benefit pension plans for life. We can easily live on those funds before we get our Government pensions and before we touch our considerable investment portfolio. All of this was done without University Educations, not one cent from anyone , no lottery wins. It can be done.

@Green__one 2 года назад

Not everyone is lucky enough to have a defined benefit pension, and the percentage who are is shrinking every year as fewer and fewer employers offer them. Even for those with such plans though you have to be careful, I was in a defined benefit plan, and I discovered that it had no cost of living increases factored in at all meaning that I'd be pretty screwed after a decade or two in retirement. With that realization, and running some numbers on expected market returns, I realized there was over an 80% chance that I'd be better off investing the money in the market myself rather than leaving it in the defined benefit plan (even after factoring in the massive tax hit for cashing out), so I took the money and now manage it myself. Only time will tell if it was the right answer, but 80% or more was good enough odds for me.

@desankadejanovic6453 2 года назад

@@Green__one This doesn't have much to do with luck, but with plan and consistency😉

@Mexicobeanpole 2 года назад

Pension? What the hell is that?? 😂

@CreativeCashflow1 2 года назад

You can tell a person's mindset by the sh*t they are impressed by.

@schuylergeery-zink1923 2 года назад

My dad just retired. He’s taken it easy the first few months just enjoying his time. Thankfully my mom is much younger than him and just got a huge pay increase so he’s easily living off of just social security basically. But he’s planning on traveling and doing fun stuff later this year. Probably spend more in the next decade and then take it easy as he gets older.

@NextLevelLife 2 года назад

Sounds like a good plan! No need to rush into things right away :)

@curiosityshop2297 2 года назад

At least $2 million if you are middle class. One big recession and most people will be wiped out.

@tomm8025 2 года назад

I like when they talk about using solar and the savings it gives you and the related reduction of money needed under the 4% rule, while completely ignoring the upfront cost to install solar, which can be substantial!!

@Mexicobeanpole 2 года назад

Yep. It’s still expensive to install. I forget how many years the break even was with your electric bill, but I remember thinking, will I even be alive then? Lol.

@tomm8025 2 года назад

@@Mexicobeanpole - Exactly. Also, if you are a minimal user like myself your break-even is further out. Same reason I bought a non-Prius Toyota more than a decade ago. The Prius was about $10K more and I just did some simple math on a Camry or Corolla and the gas savings I would have. But since I traveled a lot and put less than 5K miles per year on my car, it did not make financial sense to pay $10K more for a car I liked less for a break-even that may never be obtained. Years later seeing how much replacement batteries cost I am extra happy I didn't go that route. I conserve, I recycle and I'll do what I can, but not if it's going to cost me a lot more money.

@kaiwilson5218 2 года назад

They also do ppa programs in which solar companies maintain all the solar equipment, but you pay them for energy. This effectively drops what you pay overall for electricity compared to standard energy companies

@tomm8025 2 года назад

@@kaiwilson5218 - But is that where they put their equipment on your property? If so, it would require you give them an easement....and if I have to give up use of part of my property just to get a discount, it better be substantial. Plus, would need to know is the easement they'd acquire be enforceable upon sale of the property? If the new owner had to allow it as well, could cause issues selling the property which in itself could negate any true value you'd be getting. Companies will find anyway they can (often coming up with creative ways) to sell their products and make a profit for them! Sometimes they can make thing seem enticing when in realty the consumer is being taken advantage.

@Bob-yh7ir 2 года назад

We will need 35% of our current working income to live well in retirement. We live on 1/5 our gross pay. No debt of any kind. We will have a higher expense ratio in early retirement due to extended travel. Allocating 20-25K a year for travel. That's 3 to 4 months a year out of country if we want. Or a whole lot of cruising, etc. Know you numbers.

@michaelswami 2 года назад

Awesome. Keep up the good work.

@walnutinvesting689 2 года назад

I do beleive living off dividends is a bit more stable than selling a percent of your portfolio in retirement.

@kage-fm 2 года назад

no need to support this with evidence - simply stating it is fine.

@seanmurray8051 5 дней назад

High dividend paying stock tends to be massive, very well established blue chip company's that aren't growing anymore and so pay much higher dividends. Trouble with this strategy longer term is that lack of growth down the years. It does work for some though. If you hate the idea of selling stock once you've stopped actively earning this can be an understandable fear.

@thelonesquid7886 2 года назад

I like how this is based on 100k.. i was spending 15k per year before i retired 🤣

@5000MikeMaster 2 года назад

You probably don’t have any kids or wife…

@slofibeatsaestheticpersona4373 2 года назад

lol right? same

@gabrielbarrantes6946 2 года назад

@@5000MikeMaster because he is smart

@jayholiday256 2 года назад

Its an example

@thelonesquid7886 2 года назад

@@5000MikeMaster I do not. It does make it much much easier, not gonna lie

@rickpatterson4495 2 года назад

i have watch a couple of these,,, and they all ways say you need less,,, I have been debt free for over 10 years,, i'm still working for somebody else, with heath care, What i see my household expenses not going to change, But i will have to pickup heath care Cost, It's all about what you spend on your household the others Cost don't matter,, you never see that money coming out of your paycheck. it' what you take home and i'm sure you are not going to live on 20%.. you need to add 20% over the take home paycheck

@dstevens518 Год назад

Please correct your title to read "than you think" rather than "that". Love your videos.

@gerbil1981 2 года назад

Working on getting to FI but is there a strategy for withdrawal rate for those who don’t have someone to leave a nest egg too? Hard to predict lifespan of course but wouldn’t want to underspend in retirement when it could be more comfortable especially as UK based so care/medical not really a reason to hold much back.

@NextLevelLife 2 года назад

There are definitely more aggressive withdrawal methods that put more emphasis on the income side of things. They aren't necessarily tied to just those without someone to leave an inheritance to though and admittedly the amount of additional income that they generate do rely on a few assumptions about the investor's financial situation such as how long they plan to be withdrawing money, their asset allocation, and so on. For instance, fixed percentage withdrawal strategies (not to be confused with the 4% rule which is more of an inflation-adjusted withdrawal strategy that uses a percentage of the nest egg as a starting point) can work brilliantly with well-diversified portfolios that tilt toward long-term growth. Variable percentage withdrawals can also lead to higher incomes depending on the asset allocation. Then there are the simpler (but also potentially problematic) approaches like the 1/N method. This approach has you select a number of years you want to be withdrawal money (which replaces the N in the equation that gives the approach its name) and then run the formula to determine what portion of your nest egg you withdraw that year, subtracting one from the prior year's N value each year. For instance, if you wanted to withdraw money from your nest egg for 10 years, you'd substitute 10 in for N and withdraw 1/10 (10%) of your nest egg in the first year of retirement. Then in year two you'd only have 9 years of withdrawals left, so that would become your new N value and you'd withdraw 1/9 of your remaining nest egg. So on and so forth. Obviously, this approach can run into issues if you need to keep withdrawing longer than initially anticipated but it is an approach that some use. And there are certainly more strategies out there that could feature a greater income tilt than the traditional 4% rule but these are just a few options :)

@Green__one 2 года назад

Almost all withdrawal rate strategies you see are already geared towards not leaving an inheritance. The real trick is in figuring out your risk tolerance. The 4% rule will leave a very large amount of money behind at the end on average, but if you fall into one of the "worst case" years for retirement, you could still run out of money before you're done. Your best bet tends to be adaptive spending models where you spend more if the markets are doing well, and less if they aren't. The real downside though is that if things are going well, it's the end of your retirement when you see that you have a lot left over, not the start, but the start is where you can actually make use of that extra cash.

@TheRetirementality 2 года назад

I think your inheritance goes to the nursing home. I want something left so I can have a nice final resting place before my final resting place.

@chrisharris4223 2 года назад

Great advice already given but I would increase the 4% for sure in that case. How much do you go up to though? 5% 6%, more? Decide an amount of money you’d like to keep ‘just in case’ and leave that alone. Also decide an age you’d consider drawing the remainder up to. So if the rest is consumed in 20 years, will that be a problem? How much this will be is up to you. Also think about doing things in reverse. Make a list of the things you want to do, especially the things that cost money and plan your FI around that, leaving some space for things you didn’t consider.

@robh6545 7 месяцев назад

Could cash buffers be equal to Just continuing to work through a deep and prolonged crash? Would this strategy mitigate sequence of return risk and therefore significantly lower the amount of money needed for retirement?

@Weave.seen.this.b4 2 года назад

Solar saving money is a pretty spacious discussion; in many areas it's an expense. Now I still have years to go so, maybe in 2042

@nedsbc9104 2 года назад

While having a job, find time to learn investing & re-investing a portion of your salary in a profitable home-based business. This could produce a secondary income that could augment your financial needs, and so on. 😊

@stephaniem2743 2 года назад

Your title has a typo

@funwithrandom360 2 года назад

So many points of falsetto today!

@DRCole-kq2wk 2 года назад

Good video but the role of social security for both partners is not considered in the math.

@ronaldmarks5204 2 года назад

Factor in Social Security and this couple's retirement looks even more secure.

@unzilechris1330 2 года назад

Depending on the age of the person, Social Security may not be applicable anymore. The program has been gutted so much that it may not exist anymore in 20 years

@robmckee5295 2 года назад

@@unzilechris1330 Social security will probably be ok as long as the government doesn't run out of ink for their money printer.🙏😉

@NextLevelLife 2 года назад

That's true! Anything source of income (no matter how large or small) that they get which doesn't have to be generated from their investments will make things look even better. So not just social security but pensions, income from business/side hustles/temporary and part-time work could go a long way as well :)

@craigfleshman2715 2 года назад

Social Security will be broke by 2033, so they may not be able to count on it. Note: Social Security was only intended at first to be temporary before it became permanent. If you keep printing money it devalues it over time until it becomes worthless like what happened to Germany after WWII.

@robertgutierrez83 2 года назад

@@craigfleshman2715 You're gonna need to source that SS will be out of money by 2033

@ClaxtonBay123 2 года назад

Ok very happy to see this title. Started to think the "portfolio series" was getting a bit long in the tooth.

@andrewb9595 2 года назад

As much as I love seeing how the different portfolios stack up against each other in different metrics, it is nice to see a change here and there. Personally I'd love to see more videos exploring different withdrawal strategies, there are many that have yet to be explored.

@NextLevelLife 2 года назад

Glad you got something out of this video. As for the portfolio series, we are in the home stretch now. There's a few more that I intend to take a look at before wrapping it up :)

@NextLevelLife 2 года назад

An excellent idea, Andrew! I'll add that to my list of ideas for next year (all the videos for this year are either done or in the works already so that'll be the earliest I'll be able to turn my attention to new stuff).

@andrewb9595 2 года назад

@@NextLevelLife Not to twist arms, but Yale Endowment Spending Rule. :D

@NextLevelLife 2 года назад

Already on the list of ideas per our prior conversation ;)

@gabrielbarrantes6946 2 года назад

5 years away to FIRE, it have been really hard ngl

@Bigboss-xe6lm 2 года назад

2 years to go. Not gonna lie either. Its been freaking easy. Not from U.S. tho. U.S. is propobly alot harder than some European countries

@APerson-zf3rz 2 года назад

Didnt cover health insurance cost

@MCP12121 2 года назад

Hoping to be able to retire and live off of dividend income by the time I am 50-55!

@Felixxxxxxxxx 2 года назад

I am working with solar panels in Norway and it is not a way to save money for regular consumers. It can be good for companies, but the issue is that the panels need to be cleaned at least once per year, and replaces about every 2-5 years depending on the type and it is simply not a way to save money. With that said certain places are more suited and it might make financial sense if you live in a place with a warm climate. Still many forget to factor in the replacement and clearing costs and solar panels are usually not as advantageous as one might first believe when counting for the fact that they are able to produce less energy for every year that you have them.

@Green__one 2 года назад

While I'll agree that in many places you can't save any money with solar, NOBODY suggests replacing your panels every 2-5 years! they have warranties of 20-30 years. Cleaning is also not something that is needed on any regular basis as rain/snow take care of it, and even if you do decide to clean them regularly, it's a very DIY friendly process that doesn't require paying anyone. As for the degradation every year, while technically true, it's also an absolutely miniscule amount that most people won't even be able to measure.

@-whackd 2 года назад

You got the shittiest panels in existence if you're replacing them every couple years lmao. Get a warranty lol

@love2CUsmile86 2 года назад

Does age matter in your calculation?

@denniss3980 2 года назад

No mention of how social security will lower needed savings,

@jayholiday256 2 года назад

If you include Social Security, they would need even less. As long as we have a country, there will be SS

@-whackd 2 года назад

Is this opinion based on math?

@jayholiday256 2 года назад

@@-whackd Abolutely, jSS pays money, so you deduct that from your estimated expenses.

@pablogomez4959 2 года назад

The 4% rule assumes capital depletion after 30 years, if we add years and capital preservation then we have to reduce the withdrawal rate or increase the stock allocation to increase the chance of success

@Green__one 2 года назад

The 4% rule assumes capital depletion after 30 years only in a worst case scenario. If you are retiring at 65, and not planning on leaving an inheritance, it's pretty safe. If either of those 2 assumptions are incorrect you are right that adjustments will be needed.

@gregcountryman8770 2 года назад

I understood that I wouldn't need as much money as I think, but shouldn't we also invest more than what we need so we can pass it down to our children?

@AncientShadow 2 года назад

People in general can't think about the future let along leaving money for heirs.....

@andrewb9595 2 года назад

It depends on the situation. Not everyone has/will have someone to leave their remaining money to. It also depends on which withdrawal strategy you choose in retirement. If you use a withdrawal strategy that includes capital preservation you should still have the majority of your starting capital to leave to your heirs.

@NextLevelLife 2 года назад

An excellent point!

@NextLevelLife 2 года назад

If that's something that's important to the individual investor (as it would be for me personally) its definitely something to keep in mind when running your own numbers. But as others have said not everyone will have someone or something that they want to leave a financial legacy to so in those cases preserving capital would be relatively less important to their decision-making process. Thanks for the comment!

@gregcountryman8770 2 года назад

@@miken4591 I do agree but I think as individuals, we should make our financial goal to make our money last longer than we do. I don't want my family paying for my funeral.

@ralphemerson497 2 года назад

At a minimum, a retirement spending budget will include income taxes, property & school taxes and health care. If you can manage these lead anchors around the ankles, you should be fine.

@Green__one 2 года назад

Do you not eat? I also know that if I'm not working, I like to do something else, and almost all activities cost something, some more than others, but hobbies cost money, travel costs money, basically everything costs money. When I run the numbers, I cannot come up with any reasonable situation in which I spend less in retirement than I spend now. Taxes will go down slightly, but all other expenses stay the same (adjusted for real inflation, not the CPI which became meaningless a couple decades ago), and I have to account for activity spending in some way. I'm currently budgeting to spend $10,000 more per year in retirement than I spend right now. I'm not actually sure if that's enough.

@NathanHedglin 2 года назад

@@Green__one same. Uncle just retire at 55 and he said he’s spending 25% more before he has to pay for his own health insurance. You do more, travel more, buy toys etc

@Clone683 2 года назад

"medical bills" Me in a country with universal healthcare: "Medical what?"

@Green__one 2 года назад

I know where I am, we have universal healthcare, and once you hit 65 there are even a few more parts of it covered than for younger people. That said, if you need a nursing home, the ones covered by the government are hardly ideal, and I sure wouldn't want to be stuck in one for any length of time. A bit of money can make a world of difference in that department.

@1Phedre 2 года назад

Must be nice 😰

@Clone683 2 года назад

@@1Phedre Care homes in the UK cost around £1000+/week ($1.3k), so its definitely not an insignificant amount of money if you need care in your later years.

@thedopplereffect00 2 года назад

"taxes what?"

@Green__one 2 года назад

@@thedopplereffect00 taxes here are only higher if you ignore health care costs/insurance. If you include those costs our taxes are actually lower.

@csx2k 2 года назад

I tapped out after 3 min realizing no solid figures would be given. Nothing but generalizations

@aqadaptiveintelligence 2 года назад

Still need almost a million dollars 😅

@stevehoffman3341 2 года назад

why don't videos like this factor in social security to the overall nest egg needed? In the example above, it was stated for 100k income would need to have a portfolio of 250m... however, if SS contributes 50k/year income, then would this not cut the required portfolio in half? Is it because SS is assumed to not be around much longer?

@AncientShadow 2 года назад

Because SSI is going to change by the time most of the viewer demographic retires. By 2032 a reduction in current SSI will be cut by about 25-33% because of the big baby boomer population and the gocernment can't invest well. SSI should be the icing on the cake not the cake.

@NextLevelLife 2 года назад

Steve, I can't speak for any other creators but for me it largely comes down to a couple factors. First, it's not that I think SS will be completely gone or anything but it wouldn't surprise me if it looked a little different down the road. I don't know what those differences will be but as most of my viewers are still likely a few decades away from the age that they'll be taking social security it is something to take into consideration. Second, everyone's social security income situation will be a bit different depending on things like their career path and withdrawal decisions. So there's a lot of variability that would be difficult to capture in a simple RU-vid video. Especially when said video isn't actually dedicated to the topic of social security but is instead trying to examine a broader idea. That and as others have said if you can set your situation up in such a way that income received from social security is merely icing on the cake it would be ideal ;) You are absolutely right though! If you were getting 50k/year from social security (or a pension, part-time/temporary work, or income from a prior business/side hustle, or any other income source outside of your investments) that would significantly lower the amount you would need in your portfolio to be considered FI since the withdrawal rates that are used to determine FI are based on how much of your income needs to be covered by income generated from your investments :) Thanks for the comment!

@kevinkanter2537 2 года назад

@@NextLevelLife I missed this comment before inserting mine initially so i deleted it and copied it below for thread continuity. Your points are well-taken but I think that addressing this can be simplified by building in some median income/career-length considerations. Why don't you insert into the calculation a "Social Security even at the Trustee - estimated Trust faiure scenario of 2033 77% of benefits" or even a non-Inflation-adjusted annuity/pension starting at 65-70 to show the effect in your simulation vs just saying that you can expect the investment amount needed to be less? Or did i miss the video - is it in the "Social Security" or FI ? It might then start answering the job vs career trajectory that should be addressed by everyone, even without being 'financially independent. In fact I do believe that the answer is even more critical for engineers, STEM & professional higher continuing education groups vs trying to think that everyone is a financial consultant or selling things from their hobbies on Etsy / building a business. Thanks.

@igot5onit423 2 года назад

My number is 500k and I'm good

@Zorlig 2 года назад

Social security covers enough to retire and replaces a significant about of income for lower income people. For many it's enough to wait till 70 to take it and all you really need to fund are the years until then.

@TheSimArchitect 2 года назад

The biggest problem with all those analysis and projections is that you start from the assumption we'll get a real 4% return, risk free when, in reality, we can gamble the money on the market (and get more or even lost the nominal principal) or we get close to zero on a savings account, losing to inflation on top of our withdrawals. It is really funny to see everybody just assuming "it's easy to get a real 4% of return per year" in those videos, but nobody gives you a sure way to do that and, the more you research, the more you find out you can't even beat inflation without volatility. Otherwise you'd be able to buy an annuity to pay you 4% a year adjusted yearly according to the real consumer inflation (you know, rent, fuel, food etc). Sorry for the rant.

@TheLastAbacus 2 года назад

The basis of retirement for 99% of Americans is investments into broad large cap stocks or indexes which track the overall market. If this method ceases to work, or if you know of a better way, you ought to tell the geniuses who devised these methods in the first place because this is pretty much the universal retirement strategy. The S&P is the only game in town right now for the middle class.

@cherrystar16 2 года назад

Yess completely agree with this

@TheSimArchitect 2 года назад

@@TheLastAbacus That's the problem. There's no safe solution (otherwise most of us wouldn't be here bothering with the subject, we'd just have the money invested on a "special savings account" enjoying life... The markets can keep growing or they can crash. They can also change things around and mess up with us with some trickery. 😢

@TheLastAbacus 2 года назад

@@TheSimArchitect i dont follow your logic. You dont buy index funds to get rich or to experience massive growth with money you need. Its extra funds unneeded in the short term that you can tolerate short term losses on with the expectation and damn near certainty that it will double if not triple in 20 years. It is an invaluable resource.

@TheSimArchitect 2 года назад

@@TheLastAbacus Hum... When you retire you can't tolerate those losses because you need to withdraw to pay your expenses. How do you protect what you saved against inflation and make those 4% to be able to live on that for 40, 50, 60 years without running out of money?

@craigfleshman2715 2 года назад

What about.rising Inflation rates. The average Inflation rate before Biden was around 3 percent, now it's double that. This means to be safe you will have to have that amount of growth in your investments just to stay in sync. To grow it more you will have to grow it above Inflation.

@Green__one 2 года назад

Inflation is FAR worse than you know. Back in the 90s the CPI was majorly re-vamped to limit cost of living increases to social security. As a result, the CPI no longer reflects real inflation at all, and is drastically lower.

@realbrooklynjes 2 года назад

WHATS WRONG WITH RICE AND BEANS ? 😠

@michaelswami 2 года назад

I think a good rule of thumb is to plan for 60% of your working income in retirement.

@NathanHedglin 2 года назад

Terrible metric because it really depends on how much you spend, most spend 100% which means they’ll never retire. I live on less than 50% of my income now and my core expenses will be half in 15 years. Plus if I double your salary do I now need double to retire? Nope.

@michaelswami 2 года назад

@@NathanHedglin you are welcome to ignore my suggestion. Just because you are doing what you are doing doesn’t make my metric terrible.

@jason1pwc 2 года назад

It should really be base on spending not income.

@michaelswami 2 года назад

@@jason1pwc OK, base your projections on spending 60% of the income you make today. If you spend less than that, then withdraw less. OMG, what do you people want?

@jenniferkuzmicki7532 2 года назад

When talking about retirement age, how come Social Security Income never comes up? That’s something you can factor in as well. I understand it’s not something you can think about at first when it comes to FIRE but “retirement age” usually means in the mid 60’s, which means Social Security comes into factor. (I’m 35 so maybe it won’t be around)

@NextLevelLife 2 года назад

You're absolutely right! Any income you get from social security (or any other source outside of your nest egg really) lowers the amount your investments need to generate to maintain your lifestyle. That obviously would further reduce the size of the nest egg you'd need to build in order to be considered financially independent :)

@jenniferkuzmicki7532 2 года назад

@@NextLevelLife hey, thanks for your reply! I love watching your videos and show them to my parents so they can better understand their retirement portfolio

@jimrusconi3578 2 года назад

@@jenniferkuzmicki7532 Thanks for bringing up Social Security. Few planners factor in social security. I think it is a little unrealistic to do so. I find it interesting that people are so sure that social security will cease to exist and yet assume that the stock market is guaranteed to grow as it has in the past. The bottom line is that a very big chunk of the population depends on social security as their only income. Something will need to be done at some point.

@chrisniner8772 2 года назад

Using terms like CPI and compound interest must be theoretical

@rogerdullinger7853 Год назад

Are you seriously just ignoring social security benefit in this discussion?

@KS-mt1lb 2 года назад

So it's a Retirement "Joker" spending smile. 🤨

@quartytypo 2 года назад

Latest retirement fad is to stay at home and eat less.

@djpuplex 2 года назад

Sadly most of the money we earn and save and invest will go to a nursing home. Your house, your investments will be sold and your social security minus a couple hundred bucks (if your lucky) it will all go to a ALF or nursing home.

@cato451 2 года назад

Not true. Average stay is 18 months. Plan ahead and it’s not an issue.

@holycow3355 2 года назад

@@cato451 So living in a nursing home hasten the crossover ???!!!!

@roman7954 2 года назад

That’s not true lol

@NextLevelLife 2 года назад

Nursing homes can certainly be incredibly expensive (I know from experience as my grandmother lived in one for years before passing away this year), but there are things we can do to manage our risk against the worst case scenarios. Things like having good long-term care insurance and/or setting some money aside for that kind of care can be a good start :)

@andrewb9595 2 года назад

@@NextLevelLife To add to what Daniel said, don't forget that funding an HSA can go a long way in retirement including being a tax free way of paying for long term care premiums.