Many of you have asked what software I'm using in these projections. The software is only available through licensed advisors, but you can get lifetime access to it in my Retirement Planning Academy here → retirement-planning-academy.mykajabi.com/rpa
Looks interesting. How much of the content is different and more specific that your UA-cam videos? I’ve watched them all😊 Will it walk us through how to input into this software?
The information in this video is exactly what i've been looking for! So just to confirm, simply by joining the Retirement Planning Academy, i'll have full access to the software tool you used in this video? even without being a client of your firm?
I retired seven years ago. When I retired I owned my own home on a five acre parcel and my truck was paid off. After utilities, insurance, taxes, food and just about everything else, my monthly cost is around $1100. Instead of focusing on how much money I need to save, I focused instead on how well can I prepare and what makes me happy. I get immense amount of joy working the land and it keeps me in shape. I have great neighbors in a community that is unbelievably good. In fact, when I dream about going on my dream vacation I think of right here where I live. If you focus on being happy and preparing sensibly, then everything else becomes trivial.
You’re doing exactly what I dream of. I’m retiring in about 12 years. I’m investing almost 25% of my salary. I’m going to own a little house in the country side and grow a garden. Have the family over and just enjoy life.
I also have a large estate (6 acres), that has a current value of around $2.5 - $3m.. it’s fully paid off and we love the land but I’ve thought about selling once we retire (sometime in the next 3-5yrs)…. My thought is, would I be better off renting in retirement so I don’t get hit with major repairs or expenses on a home??? New HVAC can run 15-20k.. a new roof 20-30k… those would be brutal expenses in retirement…
This was great. I appreciate your soft calm voice and the absence of annoying sponsors and pushing for subscribers and likes. Generally classy. Thank you!
The most impactful thing I've heard is that planning is very important, and it is 100% guaranteed that your plan will be wrong, but by doing the planning you learn what levers to pull to effect things so you can adjust your life to fit the circumstances.
You don't need a 2 million dollar portfolio. You can live well on $30,000 per year as long as your house is paid off and you have good medical insurance. You may *want* a 2 million dollar portfolio but you don't *need* one. With 2 million, they can quite reasonably live on $100,000 per year the rest of their lives. Even at 2% returns (and you can get 4.8% today). $100,000 in *spending* money is equivalent to having a $150,000 salary. And when you consider the cost of working*, it's more like having a salary of $175,000. * Extra car wear requiring a new car twice to thrice as often, fuel, extra wear on more expensive clothing, dry cleaning, lunch out...and likely buying prepared food for dinner *and* breakfast often because you are too tired from working. Seriously, retired on much less, vacation 4 weeks a year (skiing which isn't cheap), still eat out 15 times a month, someplace really nice once a month, buy $600 worth of new clothes per year, etc. I'm now retired 12 years. I still have enough assets to last the rest of my life tho the recent burst of inflation *did* hurt a bit (I'd say it cut my fun money by 10% per year).
The right time to retire is when you no longer wish to work for a living AND you ARE POSITIVE that you can afford it. But remember, if you leave your job without sufficient resources, you are not retired, you are unemployed.
Well done video, nice work. I retired at 57, earlier than I thought I would, but the best decision I ever made. I was making insane money, but it wasn't worth it. My time and freedom is priceless. I didn't need a 25 minute video to know John/Jane could retire today if they want to with $2m in their retirement accounts and their house paid off. Like most people that work hard, and save, they are on track to die with lots of money in the bank, and they are likely not factoring in the real possibility of dying a *lot* sooner than they think. Crap happens. I live a simple life with all the toys I'll ever need, zero stress, total freedom! Also, I strongly suggest everyone begin taking SSN at age 62; don't trust the govt, its likely they will dramatically scale back SS in our lifetime, so grab that money while you can. Waiting to "full retirement age" is exactly what the govt wants you to do, they want you to die before taking anything out. Last, for early retirees, look at Obamacare for medical coverage until you reach medicare age, with subsidies its insanely inexpensive, especially if you are relatively healthy.
James does by far the best case scenarios for retirement. No one else on youtube comes close. Both realistic examples and very clear and easy to understand.
James, I’m 57 and I have been watching videos about retirement on UA-cam endlessly. This was by far the most informative and helpful. At least it will help me to initiate conversation with the financial advisor and ask about different scenarios.
Either buy long term care insurance, or, plan to use your home as collateral for long term care, since you will likely move to an assisted living facility and won't need your house anyway. I plan to die young in a spectacular ball of fire, so won't need long term care 🙂
I'm 23, fairly finance savvy, and about to graduate college w an engineering degree. I found this very helpful to better understand how I'll need to think about retirement👍
Excellent presentation. There are two areas of concern I'd like you to address. 1) Run the scenario using the median percentage drop of investment portfolio value that had occurred in the mortgage crisis, and time it to occur in the 4th year of retirement, then project things forward. 2) Factor in say 5 years of long term nursing home memory care using a national average cost. Both of the aforementioned concerns are not rare, and can have a major impact on sustainability. There are, of course, many other rare factors that could be considered, but if all of these additional items were planned for, retirement would no longer be sustainable. Maybe add an increase in taxes (as were running national deficits), and means testing for social security benefits. Keep up the good work.
This is great. We are retiring this summer and just went through all this with our financial planner. We have a bit more assets but this scenario is close. You confirm everything we have been told. Thank you. Love your channel and your content, James.
( UK resident). Along very similar lines - I built a "Retirement Planning" spreadsheet in Excel. It includes all the features you mention (income from pensions, other sources such as dividends from shares or property ,tax,inflation etc) but I also added an extra expenditure sheet to allow for "one off" items on an annual basis. Examples...2024 World Cruise = £xxxx or New Car in 2025 of £yyyy or " pay for wedding in 2027 or University costs for n years for Johnny" These expenses reduce the overall savings balance and allow me to say " hey, I've always wanted to do xyz but it's expensive....what difference does it make if I do it?". I have the basic costs of running the household ( utilities, repairs, food etc with inflation), annual spend allowance for "whatever I want" and then we have the expense from the "one off" sheet. You could add in a "one off " sheet quite easily. Fortunately in the UK we don't need medicare ( although private healthcare might be a worthwhile consideration). If anything serious medical issues then it is covered. I retired at 51 eleven years ago.
Great presentation. We have for 48 years been savers. We are retired and did a similar analysis two years ago and and repeated it over and over and over again. Couldn’t believe the results. It showed that we weren’t spending enough to meet our goals and still have a fair amount to leave to the next generation. Now we are thoughtful spenders. We always thought of ourselves as middle class but it turns out we are rich 😂😂😂😂. Who would have figured. 😊
@@TuBui2I regret not traveling more with our three kids (now adults). At one point, we were investing $1000/month in their 529 plans and fully funded their college educations. You can’t predict your future income level when in your 20’s. You also can’t predict how far you’ll advance in your career, i.e. working your way into management. We never imagined our salaries would be as high as they eventually were.
This is super helpful. My in-laws have zero retirement planning beyond the value in their home and their small business. This will really help me get through the pre-planning stage so that they are ready to have a productive conversation with a professional.
They have plenty of post-tax funds to manage their 1040 income to low enough levels to qualify for a very nice ACA credit, effectively eliminating their pre-age 65 (Medicare) health insurance cost. Their post-tax funds allow them to retire earlier without concerns about health insurance cost.
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement in 3 years.
To answer you question, yes! This video was sooo helpful and I appreciate you walking through each input and explaining how each affects the projection. You are the type of person I would like to sit across from to assist me on my path to retirement. I am a visual and audio learner and by you explaining as you show graphs, it helped me a lot. I also found the pace of your video, perfect. Thank you!
This was an AWESOME video - my wife and I planned goal is to retire comfortably by age 60 (we are both mid-40's). This video definitely helped set realistic expectations on that endeavor!
It’s great to have so many good options, like this couple. I’m sure they have sacrificed for years to get themselves to this point. Also glad they have an advisor that shows them the ways to they could improve their own lives with the money, as well as how they can help the kids/grandkids. I hope my children (now adults) can be in this same situation later in life. Trying to coach them to that end. Thanks for going through this scenario.
Their healthcare is going to be more than 7.5 percent of their agi, and could be deductible. They also have 500k in saving that only pay capital gains, so $3k in taxes is fairly reasonable.
Hi James, have you projected the elderly care costs when they turn to 83 years old? Assume the couple want to go to assisted living or a nursing home after turning 83, what their financial outcome will be? Thank you!
I agree. That would be good to include. In my mind, medical care and assisted living cost the biggest unknown and I would think probably be the biggest impact on the 'stress test'
I would suggest when they’re at ages 65 and 66 they take as much capital gains as possible from their investment account to take advantage of the 0% or 15% capital gains tax rate. And/or do Roth conversions those 2 years to help reduce future RMD’s.
Built a real estate portfolio that generates about $240K per year. Portfolio income of $65/yr from dividends. Both of us like to sell options for an additional $40K or so per year. Some SS that I never thought was going to be around at 62. Total outflows about 50% of our income. No debt.
Great video! Your approach to covering all the bases in retirement and being able to run multiple scenarios is extremely helpful. I am currently 53 and retirement is on my mind constantly. I am reviewing your planning academy and feel like it could help me see some of the missing pieces of the retirement puzzle. Thanks for putting out high quality content. By the way I have just started following your podcast!!!
I'm one of those who has always had a huge issue with including your home in the same conversation of retirement net worth. Unless we have a real world discussion about say a couple living in say San Jose with a paid home worth 1.3 million and upon retirement, they are planning on selling it and buy a 600k home in Arizona, the home needs to be off the table when planning retirement. It's just way to geographically squed. My home in the midwest is worth 400k. My same home transplanted in San Jose or name you expensive California town would be easily worth 1.3m. The vast majority are not planning leaving their home due liking their location, familuraety love their town, weather, family, or other reasons.
Great, great video. This has a lot of similarities to our current situation. I love the way you threw in the car purchases. I had not thought of that because we typically run keep them for well over 10 years.
This is the only channel I came across on YT with actual retirement case study examples, this is Gold. I will recommend your channel to friends and may even use your services if you are fee only financial planner. THANK YOU
I like these examples that take some different amount, either a bit tight or pretty generous, amount and run through realistic spend rates in retirement. You really get a feel for what sort of spend rate may be ballpark for you by comparing the rates of different portfolio values.
James: you do an excellent job with these videos, and this was one of the best. I very much like the general principles you apply: start with your non-financial goals, create a base case, tweak to answer "what if" questions, display the output graphically. I also like that you base this on real people, and show the appropriate level of detail. One thing I would change is your assumption that RMDs are necessarily outgoings; in my own model I calculate RMDs so that my tax calculations are correct but treat the excess of any RMD over what's actually needed in that year as a simple transfer from the IRA to other investments.
Very helpful video. You walk through your structured thinking clearly and stepwise. It’s great when you call out what the major drivers are in your analysis
I think 6.5% is quite ambitious as a long term rate of return for the investment portfolio. Of course, we all want that to be true or even a better number, say 8, 10 or 12% per year. But what if markets don’t perform well over the next few decades? Assuming that a US-centric portfolio will be as exceptional compared to other international markets, starting from today’s rich US valuations, as US returns have been over the last 50 or 100 years bakes in very optimistic assumptions. I believe that returns in the 4 to 5% range make planning like this a lot safer. It doesn’t yield the answers we all would like to see, but I think it is more prudent. I personally retired nine months ago at age 70, and maximized my Social Security, defined benefit pension and investment portfolio in the process. None of us has a crystal ball which will tell us how long we will live or how our investments will perform. My own temperament has guided me toward more conservative assumptions which do help me to feel less worried about the decisions I’ve made.
Also, inflation. Inflation over 20 years may not actually beat market growth. Consider someone who retired in 1975 (when median HOUSEHOLD income was around 14k/year) trying to live in 1995. The market boomed and busted several times between 75 and 95, and growth was not great when held next to inflation and the difference in median household income was more than double (34k/year household)
@@fortusvictus8297 Good point to bring up. If they invested in the s and p 500 from 84 to 94 it doubled without the dividends reinvested. The first index fund started in Dec. 31 1975, so it's not likely a normal person would have been in that at that time. A 10 year treasury was paying 8.75% in 1975, then in 1985 it bounced between 9.25 and 10.25%, depending on the month of 1995 it was 6.25 and 7.5%. So ya they would be doing pretty well. It's not as doable with our 15 year high of 4.75% in 2023 and most of the 2010s it was around 2-3%, so you had to be in stocks to make any money.
Really informative. Great review and how to plan to spend thru the years. I’m on that edge to retire but fret the medical costs and ability to enjoy life too. I’ll be 63, wife is 59.
Thanks James for another useful video. I think basic videos like this are very helpful to illustrate how a certain portfolio could be used in retirement. In your video, you talk about stress testing it and I think that would be an excellent follow up. Additionally, tax management is very difficult in retirement and that could be the third video that you could make, using the same clients. A multi-part video with the same clients/portfolio isn't something I've seen other people demonstrate, but I think it would be very helpful to illustrate the numerous facets involved in creating and implementing a retirement plan.
James this is very helpful. I just retired in December at age 61+ and my financial planner did a similar scenario for me. I too wanted to plan for travel and other personal needs in the future. I am lucky that my employer has a retirement medical plan so the cost is more than when I was working, but much less than COBRA and is a great plan until I qualify for Medicare.
This detail is fantastic! Liked and subscribed. Thank you fir sharing. About to turn 54 and really starting to think about retirement and have been learning and planning. Hopefully ready in 8-10 years.
This is very helpful! One thing that seems very related and that I never seem to see on this or similar channels though, is a model for what the withdrawals themselves might look like. I know it's going to be highly dependent on what an individual/couple is invested in specifically of course...but in very general terms, how might harvesting that 3.8% in the first year look like for John and Jane Sample? Where would the money likely come from -- Who's IRA? Or the join account? etc? And would they sell/withdraw monthly? Or at the beginning of the year? As needed? Weekly? What general guidelines should they use to determine what to sell if it is coming directly out of investments and not liquid cash? Riskier/speculative investments first? Or more conservative ones first? If there are stocks and bonds in the mix -- should it be one or the other first?
Bone up on excel and track your expenses by categories every month. Do this a couple of years in advance of retirement. You’ll be surprised on how much you spend and where.
Most of the people I know who have retired start going downhill fast after retirement. For many, a job provides a lot of fulfillment and sense of accomplishment. The discipline of going to work everyday, even if that's at home seems to keep people young.
File for Obamacare for two years (65 to 67) and take a distribution from 401k to get to the minimum income to qualify for benefits. I've done it for 8 years and had full coverage for less than $65 per month - no deductible, $0 prescriptions and low doctor visits ($3). $20K+ saved for 2 years for John & Jane.
James. I signed up for your retirement planning academy and as I have now entered in my details, this particular video is extremely helpful in seeing how to use the software to analyze my own retirement. I find the software is missing some (for me) important capabilities, but I know you license it so are not in control of its features, and also, I may find what I am looking for later. Thank you for all the great content.
Very helpful content including the level of detail. Will look thru your content, but seeing something about how a potential client(s) should prepare to meet with an advisor would be helpful...as would information about how the advisory relationship would work...(e.g., is there an up front cost, then an annual fee, etc.)
Even if you have the money, don’t cripple your children by paying for their college, homes and cars. Learning from those life experiences is priceless.
I make $350k and my parents bought me a car so I could go to school and get an education. A boost early in life is better than getting an inheritance when you're 70 year sold.
Cars they’re on their own, but we’re paying for tuition and housing/food (fun $ they’re on their own) and plan to help with a down payment when they’re at that point (ie match whatever they’ve saved). I don’t want them saddled with debt or throwing away unnecessary money on rent. My sister and I had a small inheritance from my grandmother to help (not cover) with both of those and our husbands didn’t - and it made a big difference in financial health. But I do agree - financial education is key.
I knew the end before you even got there. The only way they couldn’t retire now is if they were going to travel nonstop. They could easily fund their grandkids college (at least partially), do everything they want, and retire today. Never mind their house, which they could sell and just move closer to wherever the nexus of their family is (or to a nicer location). Good spot to be in, congrats.
Now a day, what car can you buy for $35k? Evan a Honda Accord is around $40k now. Also, $18k is bare two round trip first class tickets to Europe. Budget that for vacation will not be enough.
with 2m at 41 (worked 2 full time jobs for 22yrs) saved and invested into tech stocks. I earned an average of 27.3%yearly over the past 22 yrs. If I were to get 1/3 of that for the rest of my life to age 85-I'll have about 8m saved and have spent over 12m. This doesn't include SS payments calculated in. Remember-smarter-not harder.
it's good to show how the sausage is made. so yes, it does help going over the numbers. you touch on a lot of key caveats that shouldn't be overlooked.- well done..... I am in retirement and i especially enjoy you pointing out its not about the money, it's about the life we need to have
Thanks, James, I love your clear presentations, and your mindset with regards to retirement planning. I do have a concern for folks when their financial plan timeline ends at 90 years of age. I am a physical therapist who has specialized in geriatrics during my career. I have been lucky enough to work with many patients well into their 90’s, and I can’t remember one who didn’t express surprise that they’d lived that long. I think an interesting adjustment for a couple like this would have been to extend their lifespan, and make sure that the various scenarios would still be successful. (My own plan assumes my wife, who is blessed with great genes, lives until 101…)
Great point on longevity. But the real financial kicker is: what will your monthly expenses be if you have to move from your home into a LTC facility? (Yes, the home equity could pay for a lot of that, but imagine if you had to pay for care from age 85 to 95.)
@@RootFP I always project my Portfolio til my 110th birthday. Yes people are living longer, No I don't expect to make it 110 but what if? Also, like most, I'd like to leave a legacy so approaching it this way, allows my money to outlive me. Dying with Zero is nice, I suppose, but I'd rather die knowing my family is secure.
Many of you have asked what software I'm using in these projections. The software is only available through licensed advisors, but you can get lifetime access to it in my Retirement Planning Academy here → retirement-planning-academy.mykajabi.com/rpa
Looks interesting. How much of the content is different and more specific that your UA-cam videos? I’ve watched them all😊 Will it walk us through how to input into this software?
So, for a one-time fee of $195, I get lifetime access to the Retirement planning tool used in your case study videos? Please confirm.
correct@@pglover19
Similar concepts, but the videos are different than my UA-cam videos@@karenmcgovern3452
The information in this video is exactly what i've been looking for! So just to confirm, simply by joining the Retirement Planning Academy, i'll have full access to the software tool you used in this video? even without being a client of your firm?
I retired seven years ago. When I retired I owned my own home on a five acre parcel and my truck was paid off. After utilities, insurance, taxes, food and just about everything else, my monthly cost is around $1100. Instead of focusing on how much money I need to save, I focused instead on how well can I prepare and what makes me happy. I get immense amount of joy working the land and it keeps me in shape. I have great neighbors in a community that is unbelievably good. In fact, when I dream about going on my dream vacation I think of right here where I live. If you focus on being happy and preparing sensibly, then everything else becomes trivial.
So agree!
If I had $4000/month in SS, I’d think I was in heaven!
I live on a lot less!
You’re doing exactly what I dream of. I’m retiring in about 12 years. I’m investing almost 25% of my salary. I’m going to own a little house in the country side and grow a garden. Have the family over and just enjoy life.
That is awesome to hear you have such great community in retirement!
I also have a large estate (6 acres), that has a current value of around $2.5 - $3m.. it’s fully paid off and we love the land but I’ve thought about selling once we retire (sometime in the next 3-5yrs)…. My thought is, would I be better off renting in retirement so I don’t get hit with major repairs or expenses on a home??? New HVAC can run 15-20k.. a new roof 20-30k… those would be brutal expenses in retirement…
Love it!
This was great. I appreciate your soft calm voice and the absence of annoying sponsors and pushing for subscribers and likes. Generally classy. Thank you!
I appreciate that! Thanks for watching.
My thoughts exactly
The most impactful thing I've heard is that planning is very important, and it is 100% guaranteed that your plan will be wrong, but by doing the planning you learn what levers to pull to effect things so you can adjust your life to fit the circumstances.
You don't need a 2 million dollar portfolio. You can live well on $30,000 per year as long as your house is paid off and you have good medical insurance.
You may *want* a 2 million dollar portfolio but you don't *need* one.
With 2 million, they can quite reasonably live on $100,000 per year the rest of their lives. Even at 2% returns (and you can get 4.8% today). $100,000 in *spending* money is equivalent to having a $150,000 salary. And when you consider the cost of working*, it's more like having a salary of $175,000.
* Extra car wear requiring a new car twice to thrice as often, fuel, extra wear on more expensive clothing, dry cleaning, lunch out...and likely buying prepared food for dinner *and* breakfast often because you are too tired from working.
Seriously, retired on much less, vacation 4 weeks a year (skiing which isn't cheap), still eat out 15 times a month, someplace really nice once a month, buy $600 worth of new clothes per year, etc. I'm now retired 12 years. I still have enough assets to last the rest of my life tho the recent burst of inflation *did* hurt a bit (I'd say it cut my fun money by 10% per year).
30k per year is actually a decent amount of money if your house is paid off.
The right time to retire is when you no longer wish to work for a living AND you ARE POSITIVE that you can afford it.
But remember, if you leave your job without sufficient resources, you are not retired, you are unemployed.
Well done video, nice work. I retired at 57, earlier than I thought I would, but the best decision I ever made. I was making insane money, but it wasn't worth it. My time and freedom is priceless. I didn't need a 25 minute video to know John/Jane could retire today if they want to with $2m in their retirement accounts and their house paid off. Like most people that work hard, and save, they are on track to die with lots of money in the bank, and they are likely not factoring in the real possibility of dying a *lot* sooner than they think. Crap happens. I live a simple life with all the toys I'll ever need, zero stress, total freedom! Also, I strongly suggest everyone begin taking SSN at age 62; don't trust the govt, its likely they will dramatically scale back SS in our lifetime, so grab that money while you can. Waiting to "full retirement age" is exactly what the govt wants you to do, they want you to die before taking anything out. Last, for early retirees, look at Obamacare for medical coverage until you reach medicare age, with subsidies its insanely inexpensive, especially if you are relatively healthy.
yep, you got it all figured out.
James does by far the best case scenarios for retirement. No one else on youtube comes close. Both realistic examples and very clear and easy to understand.
James, I’m 57 and I have been watching videos about retirement on UA-cam endlessly. This was by far the most informative and helpful. At least it will help me to initiate conversation with the financial advisor and ask about different scenarios.
Yes, case studies such as this are very useful. Keep ‘em coming!
Will do, thank you.
The case study does not include long-term care expenses or additional medical expenses, which are huge outflows in the future.
Exactly. If someone needs a caregiver or assisted living or memory care we are talking up to $8k per month in expenses.
Either buy long term care insurance, or, plan to use your home as collateral for long term care, since you will likely move to an assisted living facility and won't need your house anyway. I plan to die young in a spectacular ball of fire, so won't need long term care 🙂
@@repomannv😂
I'm 23, fairly finance savvy, and about to graduate college w an engineering degree. I found this very helpful to better understand how I'll need to think about retirement👍
I absolutely love real life scenarios and how you take us step by step through the analysis. Very informative and helpful as always!
I think this is the best retirement analysis I've ever seen. Incredibly helpful. Thank you!
Excellent presentation. There are two areas of concern I'd like you to address. 1) Run the scenario using the median percentage drop of investment portfolio value that had occurred in the mortgage crisis, and time it to occur in the 4th year of retirement, then project things forward. 2) Factor in say 5 years of long term nursing home memory care using a national average cost. Both of the aforementioned concerns are not rare, and can have a major impact on sustainability. There are, of course, many other rare factors that could be considered, but if all of these additional items were planned for, retirement would no longer be sustainable. Maybe add an increase in taxes (as were running national deficits), and means testing for social security benefits. Keep up the good work.
This is great. We are retiring this summer and just went through all this with our financial planner. We have a bit more assets but this scenario is close. You confirm everything we have been told. Thank you. Love your channel and your content, James.
Wonderful!
( UK resident). Along very similar lines - I built a "Retirement Planning" spreadsheet in Excel. It includes all the features you mention (income from pensions, other sources such as dividends from shares or property ,tax,inflation etc) but I also added an extra expenditure sheet to allow for "one off" items on an annual basis. Examples...2024 World Cruise = £xxxx or New Car in 2025 of £yyyy or " pay for wedding in 2027 or University costs for n years for Johnny" These expenses reduce the overall savings balance and allow me to say " hey, I've always wanted to do xyz but it's expensive....what difference does it make if I do it?". I have the basic costs of running the household ( utilities, repairs, food etc with inflation), annual spend allowance for "whatever I want" and then we have the expense from the "one off" sheet. You could add in a "one off " sheet quite easily.
Fortunately in the UK we don't need medicare ( although private healthcare might be a worthwhile consideration). If anything serious medical issues then it is covered.
I retired at 51 eleven years ago.
After a lifetime of being cautious, it is difficult to spend it!
I’m 68 planning to work till 70 - this has been very informative and d eye opening - you have integrated all variables in a concise manner. Thank you!
Great presentation. We have for 48 years been savers. We are retired and did a similar analysis two years ago and and repeated it over and over and over again. Couldn’t believe the results. It showed that we weren’t spending enough to meet our goals and still have a fair amount to leave to the next generation. Now we are thoughtful spenders. We always thought of ourselves as middle class but it turns out we are rich 😂😂😂😂. Who would have figured. 😊
That’s awesome. What’s your approximate net worth?
On your way to retirement did you ever feel like you had any regrets of not spending more?
@@TuBui2I regret not traveling more with our three kids (now adults). At one point, we were investing $1000/month in their 529 plans and fully funded their college educations. You can’t predict your future income level when in your 20’s. You also can’t predict how far you’ll advance in your career, i.e. working your way into management. We never imagined our salaries would be as high as they eventually were.
Very, very well done! There are many CFP/CPAs who present this, and you are one of the better presenters!!
I’m 77 and retiring this year. This was very helpful!
Joe Biden?
77 is 17 years to late
James, this might be one of your best videos yet.
This is super helpful. My in-laws have zero retirement planning beyond the value in their home and their small business. This will really help me get through the pre-planning stage so that they are ready to have a productive conversation with a professional.
They have plenty of post-tax funds to manage their 1040 income to low enough levels to qualify for a very nice ACA credit, effectively eliminating their pre-age 65 (Medicare) health insurance cost. Their post-tax funds allow them to retire earlier without concerns about health insurance cost.
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement in 3 years.
Thanks James! Going through these real-world scenarios from your professional viewpoint is very helpful.
As usual, well done. “How do we get the most life out of our money?” Excellent!
Thank you!
To answer you question, yes! This video was sooo helpful and I appreciate you walking through each input and explaining how each affects the projection. You are the type of person I would like to sit across from to assist me on my path to retirement. I am a visual and audio learner and by you explaining as you show graphs, it helped me a lot. I also found the pace of your video, perfect. Thank you!
This was an AWESOME video - my wife and I planned goal is to retire comfortably by age 60 (we are both mid-40's). This video definitely helped set realistic expectations on that endeavor!
It’s great to have so many good options, like this couple. I’m sure they have sacrificed for years to get themselves to this point. Also glad they have an advisor that shows them the ways to they could improve their own lives with the money, as well as how they can help the kids/grandkids. I hope my children (now adults) can be in this same situation later in life. Trying to coach them to that end. Thanks for going through this scenario.
John and Jane Sample are killing it!
Super helpful Thank You, not sure how their taxes are so low $3000 a year, with the majority of their retirement in taxable IRA’S
Their healthcare is going to be more than 7.5 percent of their agi, and could be deductible. They also have 500k in saving that only pay capital gains, so $3k in taxes is fairly reasonable.
Hi James, have you projected the elderly care costs when they turn to 83 years old? Assume the couple want to go to assisted living or a nursing home after turning 83, what their financial outcome will be? Thank you!
I agree. That would be good to include. In my mind, medical care and assisted living cost the biggest unknown and I would think probably be the biggest impact on the 'stress test'
@@MikeSuding- People who need assisted living, live there, on average, 2 years. If you have 2 million in the bank and a house, that should cover it.
I would suggest when they’re at ages 65 and 66 they take as much capital gains as possible from their investment account to take advantage of the 0% or 15% capital gains tax rate. And/or do Roth conversions those 2 years to help reduce future RMD’s.
Built a real estate portfolio that generates about $240K per year. Portfolio income of $65/yr from dividends. Both of us like to sell options for an additional $40K or so per year. Some SS that I never thought was going to be around at 62. Total outflows about 50% of our income. No debt.
Great video! Your approach to covering all the bases in retirement and being able to run multiple scenarios is extremely helpful. I am currently 53 and retirement is on my mind constantly. I am reviewing your planning academy and feel like it could help me see some of the missing pieces of the retirement puzzle. Thanks for putting out high quality content. By the way I have just started following your podcast!!!
I think the detail in this video is great. You have modeled almost exactly my situation to almost the last $. Loved seeing it.
Glad you enjoyed it!
I'm one of those who has always had a huge issue with including your home in the same conversation of retirement net worth. Unless we have a real world discussion about say a couple living in say San Jose with a paid home worth 1.3 million and upon retirement, they are planning on selling it and buy a 600k home in Arizona, the home needs to be off the table when planning retirement. It's just way to geographically squed. My home in the midwest is worth 400k. My same home transplanted in San Jose or name you expensive California town would be easily worth 1.3m. The vast majority are not planning leaving their home due liking their location, familuraety love their town, weather, family, or other reasons.
Great, great video. This has a lot of similarities to our current situation. I love the way you threw in the car purchases. I had not thought of that because we typically run keep them for well over 10 years.
Great example. My wife and I are getting close to retirement, and this gives us great insight
Your case analysis is very helpful! But how to achieve a growth rate of 6.5% for a retirement portfolio at age 77? This is my main concern. Thank you!
Thanks for the suggestion. I'll add that as a potential future video topic.
This is the only channel I came across on YT with actual retirement case study examples, this is Gold. I will recommend your channel to friends and may even use your services if you are fee only financial planner. THANK YOU
I like these examples that take some different amount, either a bit tight or pretty generous, amount and run through realistic spend rates in retirement. You really get a feel for what sort of spend rate may be ballpark for you by comparing the rates of different portfolio values.
James: you do an excellent job with these videos, and this was one of the best. I very much like the general principles you apply: start with your non-financial goals, create a base case, tweak to answer "what if" questions, display the output graphically. I also like that you base this on real people, and show the appropriate level of detail. One thing I would change is your assumption that RMDs are necessarily outgoings; in my own model I calculate RMDs so that my tax calculations are correct but treat the excess of any RMD over what's actually needed in that year as a simple transfer from the IRA to other investments.
Very helpful video. You walk through your structured thinking clearly and stepwise. It’s great when you call out what the major drivers are in your analysis
100% helpful. Really enjoying the in depth analysis.
Great vid
I am like John. Not sure if I have enough, in spite of the math telling me that I have enough. Fear of unknown is real and goal post keeps on moving.
Very real indeed
I think 6.5% is quite ambitious as a long term rate of return for the investment portfolio. Of course, we all want that to be true or even a better number, say 8, 10 or 12% per year. But what if markets don’t perform well over the next few decades? Assuming that a US-centric portfolio will be as exceptional compared to other international markets, starting from today’s rich US valuations, as US returns have been over the last 50 or 100 years bakes in very optimistic assumptions. I believe that returns in the 4 to 5% range make planning like this a lot safer. It doesn’t yield the answers we all would like to see, but I think it is more prudent. I personally retired nine months ago at age 70, and maximized my Social Security, defined benefit pension and investment portfolio in the process. None of us has a crystal ball which will tell us how long we will live or how our investments will perform. My own temperament has guided me toward more conservative assumptions which do help me to feel less worried about the decisions I’ve made.
Also, inflation. Inflation over 20 years may not actually beat market growth. Consider someone who retired in 1975 (when median HOUSEHOLD income was around 14k/year) trying to live in 1995. The market boomed and busted several times between 75 and 95, and growth was not great when held next to inflation and the difference in median household income was more than double (34k/year household)
@@fortusvictus8297 Good point to bring up. If they invested in the s and p 500 from 84 to 94 it doubled without the dividends reinvested. The first index fund started in Dec. 31 1975, so it's not likely a normal person would have been in that at that time. A 10 year treasury was paying 8.75% in 1975, then in 1985 it bounced between 9.25 and 10.25%, depending on the month of 1995 it was 6.25 and 7.5%. So ya they would be doing pretty well. It's not as doable with our 15 year high of 4.75% in 2023 and most of the 2010s it was around 2-3%, so you had to be in stocks to make any money.
Really informative. Great review and how to plan to spend thru the years. I’m on that edge to retire but fret the medical costs and ability to enjoy life too. I’ll be 63, wife is 59.
Very insightful, could you explain a little more how you tie the financial plan with a monte carlo analysis in a video?
Thanks James for another useful video. I think basic videos like this are very helpful to illustrate how a certain portfolio could be used in retirement. In your video, you talk about stress testing it and I think that would be an excellent follow up. Additionally, tax management is very difficult in retirement and that could be the third video that you could make, using the same clients. A multi-part video with the same clients/portfolio isn't something I've seen other people demonstrate, but I think it would be very helpful to illustrate the numerous facets involved in creating and implementing a retirement plan.
Good point. I'll look to do a follow up that shows how we stress test this.
James this is very helpful. I just retired in December at age 61+ and my financial planner did a similar scenario for me. I too wanted to plan for travel and other personal needs in the future. I am lucky that my employer has a retirement medical plan so the cost is more than when I was working, but much less than COBRA and is a great plan until I qualify for Medicare.
Congratulations on your retirement
This detail is fantastic! Liked and subscribed. Thank you fir sharing. About to turn 54 and really starting to think about retirement and have been learning and planning. Hopefully ready in 8-10 years.
Thank you! Excellently done!
Love the scenario posts. Perfect length.
This is very helpful! One thing that seems very related and that I never seem to see on this or similar channels though, is a model for what the withdrawals themselves might look like. I know it's going to be highly dependent on what an individual/couple is invested in specifically of course...but in very general terms, how might harvesting that 3.8% in the first year look like for John and Jane Sample? Where would the money likely come from -- Who's IRA? Or the join account? etc? And would they sell/withdraw monthly? Or at the beginning of the year? As needed? Weekly? What general guidelines should they use to determine what to sell if it is coming directly out of investments and not liquid cash? Riskier/speculative investments first? Or more conservative ones first? If there are stocks and bonds in the mix -- should it be one or the other first?
So helpful! This is the first time I've seen such a detailed analysis that also includes real example numbers. Thank you for going through it all!
Glad it was helpful!
great presentation James. Really clear and really logical.
Bone up on excel and track your expenses by categories every month. Do this a couple of years in advance of retirement. You’ll be surprised on how much you spend and where.
This is a great explanation and allows me to think of additional questions. Thank you
Most of the people I know who have retired start going downhill fast after retirement. For many, a job provides a lot of fulfillment and sense of accomplishment. The discipline of going to work everyday, even if that's at home seems to keep people young.
As you point out using a constant market return is too simplistic, you should cover the stress testing
I’ll create a follow up that goes over stress tests for this
Yes, the case study is great. I appreciate seeing your analysis.
We had a meeting about retirement planning with a financial advisor in July and discovered we were okay. M
Yes! It’s helpful, and not only that but you’re breaking these concepts down in a clear way that is easy for me to understand.
File for Obamacare for two years (65 to 67) and take a distribution from 401k to get to the minimum income to qualify for benefits. I've done it for 8 years and had full coverage for less than $65 per month - no deductible, $0 prescriptions and low doctor visits ($3). $20K+ saved for 2 years for John & Jane.
This was very helpful. I appreciate the pace of your presentation.
This was my favorite of all of your videos.
Very helpful and insightful.
Wanting a new car every five years in retirement is wild to me, especially since their basic cars
They planned to replace cars every *ten* years. They have two cars in their household, so that's one car purchase every five years.
This was fantastic analysis honestly. Very insightful.
James. I signed up for your retirement planning academy and as I have now entered in my details, this particular video is extremely helpful in seeing how to use the software to analyze my own retirement. I find the software is missing some (for me) important capabilities, but I know you license it so are not in control of its features, and also, I may find what I am looking for later. Thank you for all the great content.
James so helpful would benefit from a video like this that models an earlier retirement like at 55.
Very helpful content including the level of detail. Will look thru your content, but seeing something about how a potential client(s) should prepare to meet with an advisor would be helpful...as would information about how the advisory relationship would work...(e.g., is there an up front cost, then an annual fee, etc.)
We are approaching retirement and this is the single best analysis I've seen in how to plan for our financial strategy. Thank you!
This is fantastic. Thank you for the level-headed analysis, with different options for different personal priorities.
Even if you have the money, don’t cripple your children by paying for their college, homes and cars. Learning from those life experiences is priceless.
I make $350k and my parents bought me a car so I could go to school and get an education. A boost early in life is better than getting an inheritance when you're 70 year sold.
Cars they’re on their own, but we’re paying for tuition and housing/food (fun $ they’re on their own) and plan to help with a down payment when they’re at that point (ie match whatever they’ve saved). I don’t want them saddled with debt or throwing away unnecessary money on rent. My sister and I had a small inheritance from my grandmother to help (not cover) with both of those and our husbands didn’t - and it made a big difference in financial health. But I do agree - financial education is key.
I love this amount of detail. Great work.
This is a great video. I appreciate how clearly you articulated the different options available to them.
To answer your question - very helpful! Thank you so much for all of your videos - they are very well done!
I knew the end before you even got there. The only way they couldn’t retire now is if they were going to travel nonstop. They could easily fund their grandkids college (at least partially), do everything they want, and retire today. Never mind their house, which they could sell and just move closer to wherever the nexus of their family is (or to a nicer location).
Good spot to be in, congrats.
Oh yes, this is super helpful! 🎉I feel lucky to have the ins and outs of a long range plan. Thanks for sharing.
Now a day, what car can you buy for $35k? Evan a Honda Accord is around $40k now. Also, $18k is bare two round trip first class tickets to Europe. Budget that for vacation will not be enough.
So don't buy first class tickets, and have a lot more spending money for the holiday at the same budget.
with 2m at 41 (worked 2 full time jobs for 22yrs) saved and invested into tech stocks. I earned an average of 27.3%yearly over the past 22 yrs. If I were to get 1/3 of that for the rest of my life to age 85-I'll have about 8m saved and have spent over 12m. This doesn't include SS payments calculated in. Remember-smarter-not harder.
it's good to show how the sausage is made. so yes, it does help going over the numbers. you touch on a lot of key caveats that shouldn't be overlooked.- well done..... I am in retirement and i especially enjoy you pointing out its not about the money, it's about the life we need to have
Thanks for watching!
I listen to your podcasts all the time, and this is a great example and very useful to me...Thanks!
Good scenario based information for retirement planning.
Thank you!
loved this! im on the back half of my 30s now and im alway crunching these numbers. loved to see such a detailed real world example
This is my first time seeing your content, and I want to say you are a phenomenal presenter of information.
Good analysis and thoughts here. Thanks.
This IS very helpful when you do a case example. Really well done. Thank you.
This is really great. Super practical
These detailed examples are very helpful. Thanks, James!
Glad you like them!
This is definitely useful, thank you for sharing and making these videos.
Super helpful and a very realistic example
This video is extremely helpful. This detailed analysis lets me see some expenses I didn't plan for.
Thanks, James, I love your clear presentations, and your mindset with regards to retirement planning. I do have a concern for folks when their financial plan timeline ends at 90 years of age. I am a physical therapist who has specialized in geriatrics during my career. I have been lucky enough to work with many patients well into their 90’s, and I can’t remember one who didn’t express surprise that they’d lived that long. I think an interesting adjustment for a couple like this would have been to extend their lifespan, and make sure that the various scenarios would still be successful. (My own plan assumes my wife, who is blessed with great genes, lives until 101…)
Yes good point. For many people 90 is not a long enough horizon to plan for. Thanks for the comment
Great point on longevity.
But the real financial kicker is: what will your monthly expenses be if you have to move from your home into a LTC facility?
(Yes, the home equity could pay for a lot of that, but imagine if you had to pay for care from age 85 to 95.)
@@RootFP
I always project my Portfolio til my 110th birthday.
Yes people are living longer,
No I don't expect to make it 110 but what if?
Also, like most, I'd like to leave a legacy so approaching it this way, allows my money to outlive me.
Dying with Zero is nice, I suppose, but I'd rather die knowing my family is secure.
After seeing my mom still living at 94 and my father in-law living at 96, I'm thinking I will increase our plan from 90 to 95 and 100
Would it be more realistic/conservative if we assume an annualized growth rate of 3.5% per year?
Very good thanks. Would have been good to go into the Monte Carlo and hear thoughts on what sort of success rate is considered a good planning basis.
This is very high quality. Well done 🎉