What Does It Take To Retire With $7,500/Month? 

Thank you! And wow, yes, we’ve seen this happen to clients as well. Life can throw a lot at you. We have way less control (of pretty much everything) than we think!

@@wellbuiltwealthHow is it said, .. life is what happens while we are making other plans

Thank you! And that’s actually the next topic coming out :)

Thank you so much! 🤓

Thank you :)

It’s on the list!!!

Well, thank you kindly :)

Thank you! And I’m sorry to hear this. This could be a case where you actually need more in your no-go stage 😳

Interesting, are you aware that any remaining RRSP or RRIF at death is all taxed at your marginal tax rate? Say you have 100K left at death in those accounts that’s close to a 50% marginal tax rate and the Govt will get half before any goes to beneficiaries.

Marginal tax rate for $100K in BC is currently 31%. You have to reach ~$250K to get to 49.8%. But your point is taken. All funds in a RRSP have never been taxed and are only taxed upon withdrawal at your current marginal tax rate. @@marcelmed4574

@@marcelmed4574 If you withdraw it you are paying at your marginal tax rate anyways. People need to focus on their money for them while they are alive. You can live longer than you think and money growing without tax is why you should have lots of money in your RRSP. When you are dead, you are dead, Who cares what the beneficiaries get. They'll get a lot more than if you burn it down and spend it, which is what would likely happen anyways.

@@marcelmed4574it’s true that it is not a good idea to keep RRSP till death, but average tax is about 26-27% for 100k depends on where you live. I would personally retire early and live off RRSP, use it up before the age of 65.

Thank you! 🤓

😂

Thank you very much!

I can only imagine how nice that feels

It also takes luck. The older I get the luckier I realize I am: no workplace accidents, no car accidents, no debilitating disease, no lawsuits, no divorce, no kids to bail out of jail. So many things can go wrong and I don’t intend to demean your diligence, just an add-on that things can go sideways so badly, and, in the end, it always goes “sideways” for all of us. 🎉 ❤

No debt is a massive advantage. Way to go.

Thanks! Conquest

Yes would love to know this as well please

Yes and for singles!

Good question! It means that you have 100% of the liquid assets and other sources of retirement income needed to reach your retirement income goal. If you’re above 100%, you have buffer. If you’re below, you’ll need to reduce your income goal (or sell your house, etc…).

Why only half time?

@@JayandSarahNot sure I'd want to live out of canada more than half

Thank you! And yes we do :)

You betcha. And I touch on it sometimes. And when we do custom plans for clients, we always discuss it.

Thank you! I do plan on doing a vid on this I just haven’t had the time yet. I think these have become a better option than they used to be. Some appealing things about them for sure… But I’ll make the vid and do a deep dive :)

@@wellbuiltwealth looking forward to the reverse mortgage video. It would be very helpful if you could discuss HELOCs as well

Thanks! Software details are in the description. As for bare trusts, this is an excessively lame development. I won’t have time to put out a video on this but I do recommend you search for one or two on the topic. It’s now, unfortunately, an important thing to understand.

Yup! And that dollar axis indicates the spending each year (gross value) after they retire throughout the go-go, slow-go, and no-go stages.

Conquest!

Yup. We do all sorts of scenarios.

What are new SEA countries ?

⁠@@philc824I’m guessing South East Asian…

Thailand as well. Those would be my goal. Probably Thailand.

Serious question - what health care coverage do you use/suggest?

Yes 👍 I am in PH and living quite well with my wife and spend 900-1000 per month CDN

Thanks! And they’re real :)

Thanks! TFSAs won’t mess with your GIS at all :)

Thanks! This was a simplified scenario so that the video didn’t take all day. But yeah, we can and do build closing costs etc into our real life planning.

The moment you start to think about downsizing, I think you should start looking at renting. Dumping those kind of sums of capital into non income producing assets at that stage in life.- I believe is a mistake. We retired overseas at a very early age. The cost of living in Canada gives you the impression the world is very expensive, when in fact - there are many places where those sums of money you will never outspend.

@@JayandSarah Good idea ... unless you have kid(s) you want to leave hard asset (property/home) for, then renting is not a good idea in my opinion.

Thanks! And I hear you. Practically, for many of our clients, it doesn’t happen. Case by case though. As for how to get in touch, just shoot over to our website @ www.wellbuiltwealth.ca

Its net.

Rental income certainly could.

They’re on the list!!

I do hear you. Especially if you do not own a home as a backup asset. There is risk in planning for less at that stage. And some people don’t like to. But we see a lot of situations and have older clients as well. And many simply spend very little. But when we build plans we always build them with as much buffer as possible to account for more being potentially needed. And again, as noted in the video, we always always always recommend you build a solid “war chest” for retirement as well. You will always need backup cash. Always.

Or, in our case, my father died and my mother is alive in an Alzheimer’s facility in BC that has been constantly raising their fees and is now just over $10k per month. My mom and dad were not rich by any means and had just my dad’s government job. But they saved a ton and managed to accumulate a portfolio of approx 1.5m in mutual funds and a few blue chip Canadian stocks. Dad’s pension, coupled with dividend and interest from investments covers about $8k per month and the balance is melting down the principal of the investments unfortunately. Now I know that there are other, ,cheaper options for facilities, but it was my dad’s wish that all funds that were saved be used for my mom’s comfort and care first and foremost. My point is that yes, retirement in the later years does not necessarily get cheaper, as noted by the poster above. It can maintain or even exceed levels from earlier years, and one has to assume that with inflation and high care costs that the annual expenditures will likely not decrease.

For sure. We do factor in inflation, but healthcare costs could easily exceed regular inflation. When we do custom plans, people get to pick whatever they want for spend levels. And if an expensive option for a care facility is desired, we build that in. Absolutely. Every situation is unique.

I could be wrong on this, but I feel people who have money set aside pay for their elderly healthcare, but if there are no funds, the government absorbs the cost? Am I wrong?

@@Pkeats817 I could be wrong but you are not likely to be able to select where you go if you are not paying. Thats a big deal for me. My plan has no differentiation between the 3 stages in terms of spending. Indeed I fully expect life to get *more* expensive as I age and will adjust early spending accordingly. Worst thing that happens I read more books, take more walks and my kids inherit some money. With the demographics of an aging population and people living into their 90s commonly, I am planning to self-finance the whole thing and not rely on government.

Don’t forget about inflation.

Inflation is a factor though and you also can't guarantee 5.19% every year. The software he uses runs simulations to mirror real world market fluctuations to arrive at the chance the plan will work. For example, what if in the first 3 years the returns on the portfolio is actually negative...

@@mozerm even if it sits in cash at zero return, $930k taken over 25 years from 65 is a huge amount of monthly income.

@@wellbuiltwealth if you pull out the last few years, outside of real estate costs, actual inflation has been very low in Canada over 20 years. And inflation does not affect everyone the same. When you retire, your spending declines significantly in many cases.

@@JayandSarah I think 'huge' is subjective. To some people $40K per year may be huge. To others it's poverty. Even modest inflation can compound fast over time depleting the value of cash. At modest inflation of 2.5% $40K today would require $58K in 15 years to maintain the same standard of living.

The section you’re looking at is actually describing the average need throughout retirement which includes the amounts stated in the go-go, slow-go, and no-go (those amounts are discussed in the video).

Unfortunately, it costs way more since couples are able to “share” a ton of the expenses. Plus, they often have double the CPP and OAS. So to get to the same retirement income numbers, singles have to have far more assets.

@@wellbuiltwealthplease do a similar video for us “singles” using similar numbers!?

I have a few videos on investing that summarize my philosophy on the long term consequences of owning (the 60% sleeve of a balanced portfolio) and loaning (the 40% sleeve). It’s too lengthy to write here but essentially, a balanced portfolio is easy to stomach for most people, but leads to mediocre results over the long-run. More equity in a portfolio leads to a more volatile journey, but better results. Everyone is different and has to use what they can stomach, but if they can learn to put up with a bit more volatility, it can lead to profoundly better outcomes. More to say on all this, of course, such as making sure you also have a solid war chest, making sure you’re appropriately diversified, etc.

@@wellbuiltwealth When we compare 60/40 portfolio to 80/20 since Dec.31, 2007, the annualized return of 60/40 is 5.6% and 5.1% of 80/20. Standard deviation of 60/40 is 8.1% and 11.6% of 80/20 portfolio, also max. drawdown is -23.8% and -40.9% respectively making a 60/40 portfolio clearly a better choice in retirement.

Yes, rental income is an option too. For sure. If you’re cool with dealing with all the things that come with rentals during your retirement, it can be a great way to generate some income.

Thanks! But that’s ok, I’m thinking of switching careers to become a puppeteer anyway, so it’s all good!! 😂

🤣

That's based on a couple, so not entirely unrealistic.

pretty easy for couples with DB's , ie teachers, nurses/healthcare, cops , fireman etc

I think closer to 1%. You can work until you are 65 in Canada, retire and then face an expensive retirement, and 4 years to travel with travel medical insurance before they stop underwriting you. No thanks. We retired very early 50's overseas, and live a way better life for way less money... and will not lose those best years to working, but instead seeing the world.

It’s income between two people so they are each well below clawback.

@@wellbuiltwealth ha yes. I rember that. Thanks.

No prob. It’s linked in the description.

I totally agree with you, but the fact is most Canadians don’t have pensions anymore. You only have a pension if you’re a civil servant. Most Canadians have a job with the company that provides RRSP support. So stop doing videos assuming that everyone has a pension.

Thanks! There’s a link in the description to the software. You can only access via an advisor who pays for the subscription though.

Well, that would require a custom build. And we definitely do those for people all the time :)

That’s why god made women….lol

For 2 people? They will have to pay real estate taxes right? With a 1.3 million home, that’s like 8000 a year? If. They eat out and travel…

You have to make some assumptions when making generic scenarios like this so that lots of people can benefit from it. But when we do custom plans, we build whatever the clients want. For sure.

Understandable, I get it these are superficial sales/marketing and make me happy videos. Personally I do find it somewhat disturbing in a way when I have yet to see a video here on planet RU-vid from a “wealth manager” where the possible financial realities of living longer are actually discussed. $9000 a month per person was in 2022 dollars.. wait another 25yrs folks. Like wow $$$. Yes I’m now ranting maybe it’s is a private conversation, a conversation too big to be tackled here when people’s concentration levels today are that of a squirrel, but should it be? Education system thinks it is., shush no one fails! Maybe people need to be woken up. Are you that guy? In my opinion “survival “ should be part of planning and the possible financial obligations to one’s family should also be discussed openly and discussed now! Not when the party and the European vacations are over and people are left living off CPP and OAS ie. the government. Maybe this financial outline needs to be flip flopped for some? Live on less now just in case you do actually survive? I run into this all the time, no one likes sacrifice, live for today mentality supersedes all rationality. Hey no one plans to fail, they just fail to plan. That right there is reality, and it can be absolutely crushing on so many levels yet folks just keep driving towards the cliff thinking the autopilot will kick on soon. Look squirrel! Anyway best of luck, enjoy the ride.

Many people do not require assisted living facilities or if they do in the final stages of their life it is for shorter period of time so although expensive it's for months rather than for years so the cumulative cost isn't as much as one might think.

@@DoneByD True, obviously not everyone requires it but not everyone requires certain insurances but they purchase them just in case. Personal example, my father in law had a stroke at 62, was as healthy as a horse prior, now 82, assisted living for 20 yrs and counting. Friends mother passed at 102, assisted living since 92 with dementia. So yes it happens and it can happen to you is all I’m saying. No crystal ball here.

@@Itsuptome250Agreed. This is why we buy insurance, right? Chances are your house won’t burn down, but you’d be a fool to gamble on that. My Dad was gone in 5 hours after a healthy life at home - at 101 - but he could just as easily have spent 10+ years in a care home. We plan because we cannot tell what the future holds. I guess I’ll trade a few cruises or new cars for the certainty that I won’t be eating cat food. Unless I develop a taste for it of course. 😂