💎Use fall2024 to save 10% off on our popular bond course bundle through midnight ET on 9/15/24: www.diamondnestegg.com/home#_paa2isucf 💎Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners 💎Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters 💎And join our super-supersaver membership for regular market updates & monthly live member Q&As ua-cam.com/channels/nexoc6tvesvcCEzZhmI-Ag.htmljoin >>>>>>>>>> WATCH NEXT >> Our Bond Courses vs UA-cam Membership | Which Is Right For You: ua-cam.com/video/H5h4Eyh0hjo/v-deo.html >> Bond Beginners Course Sneak Peak | I-Bonds vs TIPS: ua-cam.com/video/uXPzbje1g2E/v-deo.html >> Bond Masters Course Sneak Peak | How To Build A Bond Ladder: ua-cam.com/video/p90IDmXn19s/v-deo.html >>>>>>>>>> SOURCES & REFERENCED VIDEOS FOR TODAY'S VIDEO (AS APPLICABLE): Felicity Video: ua-cam.com/video/a1mRe1c1yAY/v-deo.html Boomer Candy ETFs & Funds: ua-cam.com/video/X4TDhFxM1ws/v-deo.html Which Dividend Fund Wins: ua-cam.com/video/Zof8HkRVWCs/v-deo.html www.fidelity.com/ https:/www.massmutual.com/ >>>>>>>>>> Here is the overview for Bond Beginners: 1. Bond Basics What A Bond Is & How A Bond Works Why Invest In Bonds New Issue vs Secondary Market Bonds Interest Rates & Bond Prices Current Yield & Yield To Maturity Always Remember This! Buying At Par, Above Par & Below Par Different Types Of Bonds Wrap-Up 2. The Risks Of Bond Investing Seven Key Bond Risks Credit Risk Interest Rate Risk Reinvestment Risk/Call Risk Inflation Risk Liquidity Risk Currency Risk & Country Risk Bond Risk Mitigation Strategies Wrap-Up 3. US Treasuries Overview What Are US Treasuries Why Invest In Treasuries Where Can You Buy Treasuries How Are Treasuries Taxed Wrap-Up 4. Treasury Bills What Are Treasury Bills (T-Bills) When Do T-Bill Auctions Happen Where Should You Buy At Auction Auto-Roll When Buying At Auction Where To Find Recent Auction Results High Rate vs Investment Rate Reopening Auctions Cash Management Bills (CMBs) Buying & Selling On Secondary Market Wrap-Up 5. Treasury Notes & Bonds What Are Treasury Notes & Bonds When Do Auctions Happen Buying Treasury Notes & Bonds Auction High Yield vs Interest Rate Floating Rate Notes (FRNs) Treasury Zeros (STRIPS) Wrap-Up 6. TIPS (Inflation-Protected) What Are TIPS When Do TIPS Auctions Happen Nominal vs Real Yields Negative Yields How Do You Adjust TIPS For Inflation Taxes On Phantom Income Secondary Market Liquidity Wrap-Up 7. I-Bonds (Inflation-Protected) What Are I-Bonds How Does I-Bond Interest Work I-Bonds vs TIPS The Annual I-Bond Limit Wrap-Up 8. Agency Bonds The Universe Of Bonds What Are Agency Bonds How Are Agency Bonds Taxed Treasuries vs Agencies Who Might Want To Consider Agencies Yield-To-Call & Yield-To-Worst Where Can You Buy Agency Bonds Wrap-Up 9. Municipal Bonds Our Bond Universe Gets More Complex What Are Municipal Bonds How Safe Are Munis How Are Munis Taxed The De Minimis Rule Social Security & Medicare Premiums Treasuries, Agencies & Munis Who Might Want To Consider Munis Wrap-Up 10. Corporate Bonds Our Bond Universe Is Complete What Are Corporate Bonds How Safe Are Corporates Corporate Bond Hierarchies Five Key Features Of Corporate Bonds How Are Corporates Taxed Treasuries vs Corporates, Etc. Who Might Want To Buy Corporates Wrap-Up >>>>>>>>>> Here is the overview for Bond Masters: 1. Stocks vs Bonds Historical Performance Are Bonds Really Less Volatile Why Invest In Bonds Accumulation vs Decumulation Allocation of Stocks vs Bonds Wrap-Up 2. Which Bonds Might Be Right For You Treasuries & Other Types of Bonds Nominal vs Real Yields Inflation vs Non-Inflation-Protected Taxable vs Tax-Advantaged Accounts Wrap-Up 3. Bond Ladders & Other Bond Strategies Normal vs Inverted Yield Curve What Is A Bond Ladder 5 Important Bond Laddering Questions Laddering When Rates Are Rising Laddering When Rates Are Falling Laddering When Rates Are Uncertain What Is A Bullet What Is A Barbell Wrap-Up 4. Holding to Maturity vs Selling Early Why Hold to Maturity When To Sell Early Before Maturity Tax Implications Of Selling Early Wrap-Up 5. Individual Bonds, Bond Funds, Etc. Why Buy Individual Bonds Why Buy Bond Funds Bond Fund Considerations Key Bond Fund Concepts CDs vs Treasuries Other High-Yield Investments Wrap-Up 6. Our B.E.S.T. Model Portfolios By Age Our B.E.S.T Model Portfolios By Age Model Portfolios In The Industry B.E.S.T Model Portfolio Difference How Much Do You Need To Retire? How I Use The Rules of 100, 110, & 120 B.E.S.T Model Portfolios (20s) B.E.S.T Model Portfolios (30s & 40s) B.E.S.T Model Portfolios (50s & 60s) B.E.S.T Model Portfolios (70s+) Wrap-Up 7. The Decumulation Phase What Is The Decumulation Phase? Bear Markets & Recessions What Can You Do In Bad/Bear Markets Decumulation Tax Considerations The 4% Rule The Bucket Strategy The Flooring Approach Jen’s Bucket Strategy With A Twist Wrap-Up >>>>>>>>>> Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that: 1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances 2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY
Why do I like your channel so much? Your videos are focused, the language is accessible by us non-economists, the visuals/videos are great, and the message is clear. MUCH APPRECIATED!
Thanks for this video! A friend of mine just retired and she's in a similar situation. She had $620K saved and with the help of a fee-only financial advisor she bought a Single Premium Immediate Annuity (SPIA) for $300K that will pay her $22,970 per year for life. Combining that with her social security of $25,600 per year she has $48,570 per year (before taxes) which will cover all of her core living expenses. For the remaining $320K she has it invested 40% in equities and 60% in fixed income. It's more than possible to retire on $500K (and often even less). It just depends on what your expenses are in retirement. Where you live, how you live, and how much debt you have are the three big things to focus on. Thanks again for all of your helpful advice! 😇
@@Trust_but_Verify She's 62 and it's a "life only" annuity which means if she dies before the $300K is paid out whatever has not been paid out will go back to the insurance company. The "life only" option provided the highest monthly payment but she understands the risk if she dies early. But she doesn't have any dependents (never got married or had kids, parents are deceased, and she has no brothers or sisters) so she has nobody to leave the money to (although she did consider a charity but ultimately decided against that). The good thing is she's in perfect health - no history of heart disease, good cholesterol and blood pressure, not taking any prescription drugs, and is very active (cycling and swimming) so hopefully she'll live for 20-30 more years (in which case she could end up getting over $700K from the insurance company).
@@Trust_but_Verify She's 62 and it's a "life only" annuity which means if she dies before 13 years whatever has not been paid out goes back to the insurance company. But she never got married or had children and she has no brothers or sisters so there's really nobody she could leave the money to other than a charity but she decided against that. She's also in very good health (no prescription drugs, good cholesterol and blood pressure, no history of heart disease in her family). And she does a lot of swimming and cycling. Definitely not your average 62 year-old. Hopefully she'll live for 30 more years. If so, she'll end up getting over $700K from the insurance company.
@@Trust_but_Verify True. You can definitely do better in the markets (usually) and she gave a lot of thought to that but $620K total saved for retirement isn't a ton of money and there's always the chance of taking big losses to your portfolio early in retirement which could be difficult or even impossible to recover from (sequence of returns risk) so she decided to play it safe. The good thing is she still has $320K that she can invest for growth since all of her core expenses are covered by Social Security and the annuity. Her advisor actually wants her to be at 70/30 (stocks/bonds) but she's staying at 40/60 for now. The annuity is issued by New York Life which is one of the strongest insurance companies out there. And if an insurance company that issues an annuity goes under, every state has an association that comes to the rescue (up to a limit of usually $250K-$300K). Here's more info on that: www.annuity.org/annuities/regulations/state-guaranty-associations/.
@@Trust_but_Verify True. You can definitely do better in the markets (usually) and she gave a lot of thought to that but $620K total saved for retirement isn't a ton of money and there's always the chance of taking big losses to your portfolio early in retirement which could be difficult or even impossible to recover from (sequence of returns risk) so she decided to play it safe. The good thing is she still has $320K that she can invest for growth since all of her core expenses are covered by Social Security and the annuity. Her advisor actually wants her to be at 70/30 (stocks/bonds) but she's staying at 40/60 for now. The annuity is issued by New York Life which is one of the strongest insurance companies out there. And if an insurance company that issues an annuity goes under, every state has an association that comes to the rescue (up to a limit of usually $250K-$300K). Here's more info on that: www.annuity.org/annuities/regulations/state-guaranty-associations/.
I just turned 69 and have right at 500k . I'm keeping about 25% in a mix 3 stock etfs, SCHD(30%, SCHK(50%) , and SCHG(20%. They should take care of inflation. The other 75% in a mix of Bonds, CDs and preferred stocks. I'm making about $20k in income. Plus I live in a LCOL area by choice, I like to fish and hunt.
Its crazy. Just a few years back I read where I needed $250k to retire...well...now its $500k !! 😮 That's not going to happen. You'll have to be rich to retire. My home value keeps appreciating. Which means higher taxes every single year AND higher insurance, not to mention maintenance as it ages. Its not an asset unless I sell; and the older we get the less likely we are to move to a likely even smaller but pricier home. Even though we've down sized years ago and always lived below our means, and very frugally, all costs are continuing to rise faster than our investments 😢 People need to calculate for rising costs AND BIG medical bills too!
I have a very similar situation as Joseph, but I think it’s important to consider trying to grow your account balance by adding equities. I only use ETF’s for my equity holdings. I have 100k in S&P 500 (IVV or VOO) which has grown 30% in the last 2 years including the recent market down turn. Just something to consider.
I only have $300,000 401k when I and my wife retired. I retired at age 55. The key is not how much you have but expenses, expenses, expenses...meaning we lowered our expenses by downsizing our house. We moved to a no state tax and low property tax state. No credit card debts and no car payments. We lived on a $2500 monthly 401k withdrawal and when I turned 62 I collected Social Security and stopped withdrawing from my 401k...Now after 10 years retired my 401k still has $250k remaining and I may not touched this ssince my wife now is collecting social security...Note since we are not yet eligible for Medicare, our coverage is through ACA (thank you).
Impressive that you can do it with 300k! When you withdraw from 401k at 55 do they hit you with the early withdrawal penalty? When you apply for ACA do they look at how much you have in savings and 40k? I always wanted to retire early but I’m most concerned about paying high premium on monthly health insurance
@@jeancai4098you can withdraw from 401k from age 55 without penalty (of course you need to pay taxes since these are pretaxed) as long as the amount is in equal monthly withdrawal and you have to be completely out of the workforce. When you reach age 59 1/2 you don't need to comply with these two conditions. For ACA they only look at current year income. We tried to limit our income/withdrawals to $50k a year so we get almost the whole premium subsidized...
Tremendous information-packed video there! Also a lot of complexities or rabbit holes for a newbie. Glad we can play it over and over. I also just wanted to throw in that people not yet receiving Social Security should keep in mind that if you take more than the most basic Medicare (most people would want to), it is going to be deducted from your Social Security payment. So don't forget to figure that into what you think you are going to receive net.
I'm at the point now retired just started getting social security, it's a psychological eye opener instead of adding to accounts to start withdrawing from accounts to make ends meet.
This was VERY helpful. A single example examined in detail -- perfect. Even if your situation is quite different, it's very helpful to hear Jennifer's reasoning.
Jennifer -- with the market worried about fed rate cuts, this will have obvious implications for many fixed income securities. It'd be nice to see a video on what to purchase when interest rates fall. (Also, if it is second market, how to avoid purchasing a bad security.)
Great video, thank you. Something I'd just like to mention that I don't hear very often when figuring out expected monthly/yearly living expenses is all the unexpected things that happen in life. Whatever I think I need I budget 10% more. Some years I'll spend less, but this year was more than the 10% I budgeted for (so was last year). Such is life. For instance, this year I had to replace a refrigerator, garage door & other unexpected home maintenance items, set of car tires & battery, car & home insurance up 20%, attended an out of area wedding (airfare, rideshares, hotel, gift, meals). Along with a few other things we've spent close to $8,000 extra so far, and the year isn't over, ugh.
The amount depends on expenses really. Having zero debt is important. Living in NJ, but not permanently to retire here, having a minimum income if 100k would be the target. Just to live. Property taxes, income taxes, home maintenance, car, expenses. You'd need a few million to generate that. Then cushion, etc. I'd say 3 to 4 million to be comfortable.
Jennifer, Great video. I really like these personal vignettes. Regarding Joseph's vignette. What about survivorship? If he buys an life annuity and dies before 85, the annuity is terminated, spouse gets nothing. If he buys an Annuity with Survivor benefits then I believe the premiums are double. On the 15 year T Bill ladder, upon his death, his spouse/survivor would inherit the T Bills outright. So from a survivorship aspect I believe I would sleep better at night knowing that my surviving spouse would have the T Bills for living expenses. Your thoughts? PS, just signed up for the Bond Beginner Course for October.
Great video, Jen. Thank you !!!! Option one for me. I would like the security of the annuity income, because it covers the shortfall without risk, and the return on the annuity that Jen showed is much higher than I would have thought! Option one leaves a good amount of money as a cushion and for other purposes / investments. Possible healthcare costs are a 'wild card', and they could drain savings really fast.
Would your friend be willing to gift me $300k? That's the bare minimum I would need to retire right at this very moment and prove to him that you don't need $5 million. I'd even be willing to fully disclose my finances to him to prove that I am legit. I would use the money to pay off the remainder of my mortgage in a lump sum. Without the mortgage, I would have enough money to cover my yearly expenses until I reach 59 1/2. After that, my own 401k money combined with whatever Social Security I receive can pay for my expenses for the remainder of my retirement.
You mentioned that you had several preferred companies that provided SPIA annuities but didn’t specify company names. I could not locate a video from your channel that covered SPIA annuities. Do you have a video that would cover the basics of SPIA annuities?
I think her annuity guy is named Jonathon, so if you email Jennifer, she can pass along his contact info. I would like to learn more about SPIA annuities too.
My wife and I have $2m and we’re both retired with pensions. We live below our means and put our two children through college. We retired at 55 and still live within our means. No money worries.
May I ask what you are doing for healthcare? I’m currently looking at options. I’ll need to buy Obamacare or something for a few years until I reach 65.
@@daver6564 ACA silver plan. I purchased medical insurance via COBRA after I left my employer in 2013. I then switched over to purchasing medical insurance through HealthCare.gov in 2014.
Although I made way less than my friends for the 20 plus years I was in the military, I knew my pension would serve as my secure bucket. So I plan to stay at least 80% in the market with my IRAs taxable investments until at least my 70s. My home will be paid off before I retire from the military and the one I buy after retirement I want paid by 55. That will give me my realestate cash flow bucket.
For higher interest rates you could try mixing in USHY, ANGL, FALN. And to hit 6-7% safely you have a variety of options with MLPs, REITs, Preferred stock. To hit 8-10% you can go with Closed End Funds and Covered Call Funds. And if you really want to go big - funds like AOD, GOF are way north of 10% in distributions.
GOF has been declining in value for 3 years now, 3 years that have been fantastic for the S&P and DJIA, so that yield pales in comparison to the loss of principal value. AOD has gone down tremendously for the last 2 decades and has flatlined for the last 12 years. If you bought back in 2007, you are down over 78%...hard to make that up with a 8.xx% dividend. I think I'll pass......smh
Great video as always. I am not sure where he lives that his costs are only $3500 per month. My property tax, condo fee, insurance (health, life,auto,home,umbrella) cable/phone/internet and utilities is more than that before eating, clothes, travel or entertainment.
Very possible if one lives alone, has Medicare, is very frugal, rent (not own) of $2000/month, minimum expenses of food, utilities, car insurance, renter's insurance, cable/phone/internet package with Xfinity, cell phone, very rarely buys clothes, very rarely travels, entertainment is riding a bike, walking, volunteering, etc. I do this and I'm in the greater Sacramento, CA area. My expenses are around $3500/month, just like Joseph's.
I live 10 minutes from NYC. My expenses are less than 3k/month. My expenses are around $2800. When i retire i can manage under $2500 but then add in health insurance 1500 rent 70 internet 70 average utility bill 200 groceries 400 eat out/happy hr (usually less) 500 travel 3-4x per yr 50 miscellaneous shopping
Jen, could you please speak on different types of "financial advisor" out there? For instance, what's the difference between Registered investment advisor (ria) and say, a bank's Financial Advisor, or a Certified Plan Fiduciary Advisor? Is there a federal or national standards /credentials/ need-to-know when searching for an advisor? Thank you!
Great video. At 59 I recently constructed a very similar portfolio (sep) $500k using what you have labeled Option 2. It’s nice to see some expert confirmation of my thinking. Ideally, I won’t need the income for a few years and plan to use the coupons I’ll see in that time to buy back some of the equities I had to sell in order to lock in these current yields. I’m hoping that will help recapture some of the growth I’ve had to sacrifice. As others have said: I believe the key to having security with a “small” amount of capital is debt - or the lack of it. Retire debt, live frugally, always protect your principal. And try not to forget to enjoy yourself. Love your channel!
You are always informative. Thank you! Could you please talk about how to get the best annuity rates NOW (before the for sure interest rate cuts coming up) so I can make a decision to purchase an annuity NOW to LOCK IN NOW for 5 years the highest yield? MYGA, Fixed-Indexed , Deferred is my preference . Timing is of the essence. Online tools for comparison? Top, reputable companies? Can I buy it myself without an insurance agent? High rate, safety, easy to work with companies are my priorities. 💐
What about end-of-life health expenses? Not talking about mere annual checkups and prescriptions. We all will inevitably require long-term care at exorbitant costs. Some will be lucky to get help from children or DIE QUICKLY or efficiently enough soon after slowing down. Others may require years of care at six-figure annual expenses. Do we plan for it financially? Imagine burning 200k in what you think is your last year or two, then suffering broke as a complete invalid on social welfare for several more years.
I bought Long term care when I was in early 30's for me and my wife. I am glad I did. I have been paying 550$ per ANNUM (not monthly) for both of us. Now I am 55. My friends of my age when tried to buy LTC, they were given a quote of 13K per year premium for both husband and wife. Daily 300$ for home nurse care which is 9K per month payment per person. Total max LTC care is 350K per person.
In holding a policy for so long, would the originally declared coverage still apply? And does it scale with inflation? If you live healthy for another 20 years before needing to draw coverage, will it be enough? I'm thinking of getting an annuity with LTC rider. It's also better cost the younger age you buy in, but with an annuity, the payout is monthly money for living expenses. Hard to find though from a reputable carrier.
Wow! There was a ton of great information in the 3 investment scenarios. The only thing I'd be concerned about with an SPIA is ensuring to customize it so there is a cash refund if I happened to die before receiving the entire principal plus the interest that principal generated.
I appreciate your video. It's full of information that a lot of people can use and, especially me, can learn from. I have always held that owning the bonds, not bond funds, is the way to go. Your info on doing that is helpful. I also have annuities. One is already paying me pretty nicely. The other will provide an income increase in a few years. (That's my inflation protection) Well done and thank you for your insight. Cheers
Are annuities through top notch insurance companies safe? As short term T-Bill rates are coming down below 5%, you can still get 5% in an annuity. Thoughts?
You have such an IMPRESSIVE Best of the Best presentation and it look like I am ADDICTED to your program. With respect to this section decently it should be mentioned REDUCTION of LESS CONSUMPTION and also MAJOR HEALTH issues that should be on people mind. Older people don't want to ask financial help from their kids. 💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗
Annuities can be messy and confusing, plus if you make a mistake too late. SPDA - SPIA - NON-QUALIFIED/QUALIFIED ANNUITIES , fees, beneficiaries etc. IF you have a nice sum that, in your mind you will never touch and want something somewhat "guaranteed" then yes an annuity may be the way to go but there is a lot of work to choose wisely.
Thank you, Jennifer. As far as suggestion for Joseph. A wise friend suggested I estimate retirement income and try to live 2 years on 60 or 70% (was in high tax california at the time). That was an eye opener as things popped up during those 2 years that were surprises. My personal results. I worked an extra year ( easier to work on existing job than find another after retirement if there were more surprises). Completely NO debt. Downsized and moved out of california. Realize that SSA cola likely won't cover your inflation costs, so get creative.
Option 1 plus a low intensity part-time job or side hustle. Unforeseen expenses are real, and if one is lucky enough not to have many, he can invest the extra (or spoil the grandkids 😂)
does Joe have any real estate that he will liquidate later in life while downsizing for a capitoal gain(post tax) that is considered in this calculation?
This video just came up in my UA-cam feed (12/01/24) ... Many great points and options But one could also build a MYGA (Multi-Year Guaranteed Annuity ~ which is essentially a CD issued by an insurance company) ladder Rates are still in the upper 4% to just over 5% range APY for up to 10 years of maturity Interest is deferred, and there are options for liquidity of portions of the amount such as 10% per year or Interest per year depending on the policy ~ with a ladder of multiple policies, that could spin off the needed income from interest and retain the principle for redeployment at end of contract
If you buy an annuity or treasury, will your money be locked up in case of an emergency? Odds are Joseph will not be in perfect health for the rest of his life. He may have to go to assisted living. That money in an annuity/treasury could pay for his assisted living for a few years. On average, people live in assisted living for 2 years before they pass away. Something to think about. I guess they will probably give you the money back, but I wonder how much they might charge as a penalty. I am just thinking out loud, and I don't know any of this for sure.
I was going to make a separate comment about several Pimco bond funds which have been paying out a steady ~ 10% pa on a monthly basis for quite a while. PDI is one; we also have PCN and PTY. Jennifer, it would be interesting to hear your views on funds like this, which offer much better yields than treasuries.
Why not consider MYGA annuities? Some are paying over 6%. That is what we are doing. They are like bonds. We are purchasing them in our pretax IRA accounts.
Question on bond investing. Say a year ago I bought a bond with a coupon rate of 4% at 100, maturity, January 1 2026. By the end of the 2024, fed lowers interest rates by half a percent. With Fed funds rate at 3.5%. My bond is now worth 105. Better me for me to sell before maturity at 105. if I wait for maturity, I’ll get 100. Correct?
If you hold to maturity, correct, you will get 100. But whether it's better to sell at 105 is debatable. If you sell, the profit would be a short term capital gain, which is not state tax exempt like treasury interest. Also, if you want to reinvest the money, it would be at the current, lower rate.
@@DavidLitman-ph9lu yes. True. Thank you. However, if we continue to play the bond game and anticipate interest rate dropping over the next year or two. Sell my 105 which matures in about 12 months and take the capital gains. Take the proceeds and buy a three-year note which is yielding about 3.7%. I’m assuming interest rates will drop another two or three 1/4 points within twelve months. In a couple years, we would be in a position to take capital gains yet again by selling these three year notes early. Does this make sense?
@@Dean-p3k Makes sense on paper, but no one knows for sure that rates will continue to fall. Like DNE says, everyone's journey is different, good luck with yours!
Without knowing more detail, it appears to me that Joseph is entirely too conservative with his investments. As interest rates start to decline it will get even worse. He needs to have some exposure to equities and maybe some real estate investments. He will survive on that half million, but won't be living what I consider to be"well" (travel, hobbies, transportatoin, etc).
If his home is paid for and he isnt leaving it to familiy, J could consider a reverse mortgage and (in Cali) possibly double his current portfolio. Then consider using his lifetime of knowledge and expertise to create a small passive income stream .
Great content. Have you looked into buffer ETFs? They may be appropriate for a portion of this man’s retirement funds in that they provide the opportunity for appreciation with zero downside risk.
I'm not getting the " 21 year spend down with a 20K shortfall." Wouldn't the money he made off the 531K investment every year (around 26K at a safe 5%) cover the shortfall?
Yes Joe can retire with no problem. Mainly if his house is paid off and credit cards . It’s a doable amount . I would know I did ! I am close to his numbers
Not enough for me. But it depends on your age and debts and expenses. I am 57 and have about $10 M and while I realize that’s a LOT my expenses are very high. I have 2 houses boats etc. everything is paid but ongoing maintenance and taxes insurance etc adds up. If I was 65 I would retire today. But being 57 and still paying for kids college I would like to get around $2 MM more plus continue earning for a couple more years to pay my expenses. I get to do most things I want within reason and travel etc because my job allows me great flexibility. But I won’t lie it gets harder each day to go to work!😂
Wow 10m and cant retire? Wow! 10M in an SP 500 like VOO avg 11% or 1.1M per year. Congrats on your finances. Im 51. I have 1.5m my wife has 500k. She is 50. Im retiring in 6 months. Im tired. Time flies. Last week i was 30. I want to enjoy doing other things. My house is paid off. No boats! 😂. Bro i know is not my business but dont wait too long to enjoy your time here. If you love your business then ok but if like me your tired of it. Stop wasting your most precious asset. Your Time. Its not worth it
@@rriqueno you sound like the angel on my shoulder arguing for retirement with the devil who says nah keep working. As I wrote my comment I will admit I was embarrassed to even admit these facts. Ive never been about flash or showing off or anything. I have always been frugal and really just saved and built my way slowly into having more things and just spending more. Part of it is my own insecurity with money. Having worked since I was 12 and always saved it seems only natural to keep doing it. I dream about retiring but it freaks me out to not earn and save anymore. I could afford to retire right now by simply downsizing some. My money is split about 60/40 stocks and t bills. The dividends and interest generate enough income to cover my expenses Without having to touch the principal. I do still support my kids and their college costs but that’s manageable. The more I think about my situation the more I am beginning to realize that it’s all psychological. I have to just jump in that retirement pool and stop worrying about the water being cold!! I have a feeling I will do it within a year. And then I’m off to Spain for 3 months!🍷
@@GP-fw8hnHubby & I are 56 & 60yrs old respectively. While he worked for corporate America, I built wealth through LT rentals & occasional flips over the 30 years. He retires from corporate America this Friday after my begging & pleading for 5 years. He has your work ethic mentality, & I’m extremely disciplined, focused but more than ready to enjoy the fruits of our labor. We’ve grown apart & have accumulated 10M in assets with absolutely no debt. That’s what happens when you grow your wealth & disregard fun, your marriage & working as a team. Maybe your “work until you’re 70” feeds your ego, but don’t starve your wife in the process. Don’t delay gratitude. Thank God we’re in great health, super physically fit & have $$, but it’s sad to know I’m sharing what should be the best years of our lives with a stranger.
The 600-pound Gorilla is inflation/devaluation. SS Payments will underperform the true loss of purchasing power which means the 20k shortfall will grow every year. The government has a vested interest in understating inflation numbers because it reduces their SS liability. Anyone who buys an annuity will also see their purchasing power diminish.
This video gives me hope. USD500,000 to bridge someone through retirement and onward to heaven elates me. If this video is strictly applicable to only Americans, then it helps me understand why Americans are so positive and happy.
@@JohnDoe_1609 American economy won’t be able to sustain any serious interest rates anymore so expect 2.5-3% tops in T-bills. Put 1.5 million in for 45k pre tax in interest. That’s about 3k per month plus the social security and other things. Minis property taxes and the rest of recurring bills. Cook at home, don’t buy expensive cars and you can sustain yourself for 30 years I think. Probably you can afford one trip to Europe per year with your spouse. I have 2 kids in middle school so it complicates things a lot.
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SOURCES & REFERENCED VIDEOS FOR TODAY'S VIDEO (AS APPLICABLE):
Felicity Video: ua-cam.com/video/a1mRe1c1yAY/v-deo.html
Boomer Candy ETFs & Funds: ua-cam.com/video/X4TDhFxM1ws/v-deo.html
Which Dividend Fund Wins: ua-cam.com/video/Zof8HkRVWCs/v-deo.html
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Here is the overview for Bond Beginners:
1. Bond Basics
What A Bond Is & How A Bond Works
Why Invest In Bonds
New Issue vs Secondary Market Bonds
Interest Rates & Bond Prices
Current Yield & Yield To Maturity
Always Remember This!
Buying At Par, Above Par & Below Par
Different Types Of Bonds
Wrap-Up
2. The Risks Of Bond Investing
Seven Key Bond Risks
Credit Risk
Interest Rate Risk
Reinvestment Risk/Call Risk
Inflation Risk
Liquidity Risk
Currency Risk & Country Risk
Bond Risk Mitigation Strategies
Wrap-Up
3. US Treasuries Overview
What Are US Treasuries
Why Invest In Treasuries
Where Can You Buy Treasuries
How Are Treasuries Taxed
Wrap-Up
4. Treasury Bills
What Are Treasury Bills (T-Bills)
When Do T-Bill Auctions Happen
Where Should You Buy At Auction
Auto-Roll When Buying At Auction
Where To Find Recent Auction Results
High Rate vs Investment Rate
Reopening Auctions
Cash Management Bills (CMBs)
Buying & Selling On Secondary Market
Wrap-Up
5. Treasury Notes & Bonds
What Are Treasury Notes & Bonds
When Do Auctions Happen
Buying Treasury Notes & Bonds
Auction High Yield vs Interest Rate
Floating Rate Notes (FRNs)
Treasury Zeros (STRIPS)
Wrap-Up
6. TIPS (Inflation-Protected)
What Are TIPS
When Do TIPS Auctions Happen
Nominal vs Real Yields
Negative Yields
How Do You Adjust TIPS For Inflation
Taxes On Phantom Income
Secondary Market Liquidity
Wrap-Up
7. I-Bonds (Inflation-Protected)
What Are I-Bonds
How Does I-Bond Interest Work
I-Bonds vs TIPS
The Annual I-Bond Limit
Wrap-Up
8. Agency Bonds
The Universe Of Bonds
What Are Agency Bonds
How Are Agency Bonds Taxed
Treasuries vs Agencies
Who Might Want To Consider Agencies
Yield-To-Call & Yield-To-Worst
Where Can You Buy Agency Bonds
Wrap-Up
9. Municipal Bonds
Our Bond Universe Gets More Complex
What Are Municipal Bonds
How Safe Are Munis
How Are Munis Taxed
The De Minimis Rule
Social Security & Medicare Premiums
Treasuries, Agencies & Munis
Who Might Want To Consider Munis
Wrap-Up
10. Corporate Bonds
Our Bond Universe Is Complete
What Are Corporate Bonds
How Safe Are Corporates
Corporate Bond Hierarchies
Five Key Features Of Corporate Bonds
How Are Corporates Taxed
Treasuries vs Corporates, Etc.
Who Might Want To Buy Corporates
Wrap-Up
>>>>>>>>>>
Here is the overview for Bond Masters:
1. Stocks vs Bonds
Historical Performance
Are Bonds Really Less Volatile
Why Invest In Bonds
Accumulation vs Decumulation
Allocation of Stocks vs Bonds
Wrap-Up
2. Which Bonds Might Be Right For You
Treasuries & Other Types of Bonds
Nominal vs Real Yields
Inflation vs Non-Inflation-Protected
Taxable vs Tax-Advantaged Accounts
Wrap-Up
3. Bond Ladders & Other Bond Strategies
Normal vs Inverted Yield Curve
What Is A Bond Ladder
5 Important Bond Laddering Questions
Laddering When Rates Are Rising
Laddering When Rates Are Falling
Laddering When Rates Are Uncertain
What Is A Bullet
What Is A Barbell
Wrap-Up
4. Holding to Maturity vs Selling Early
Why Hold to Maturity
When To Sell Early Before Maturity
Tax Implications Of Selling Early
Wrap-Up
5. Individual Bonds, Bond Funds, Etc.
Why Buy Individual Bonds
Why Buy Bond Funds
Bond Fund Considerations
Key Bond Fund Concepts
CDs vs Treasuries
Other High-Yield Investments
Wrap-Up
6. Our B.E.S.T. Model Portfolios By Age
Our B.E.S.T Model Portfolios By Age
Model Portfolios In The Industry
B.E.S.T Model Portfolio Difference
How Much Do You Need To Retire?
How I Use The Rules of 100, 110, & 120
B.E.S.T Model Portfolios (20s)
B.E.S.T Model Portfolios (30s & 40s)
B.E.S.T Model Portfolios (50s & 60s)
B.E.S.T Model Portfolios (70s+)
Wrap-Up
7. The Decumulation Phase
What Is The Decumulation Phase?
Bear Markets & Recessions
What Can You Do In Bad/Bear Markets
Decumulation Tax Considerations
The 4% Rule
The Bucket Strategy
The Flooring Approach
Jen’s Bucket Strategy With A Twist
Wrap-Up
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Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that:
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Why do I like your channel so much? Your videos are focused, the language is accessible by us non-economists, the visuals/videos are great, and the message is clear. MUCH APPRECIATED!
Thanks for this video! A friend of mine just retired and she's in a similar situation. She had $620K saved and with the help of a fee-only financial advisor she bought a Single Premium Immediate Annuity (SPIA) for $300K that will pay her $22,970 per year for life. Combining that with her social security of $25,600 per year she has $48,570 per year (before taxes) which will cover all of her core living expenses. For the remaining $320K she has it invested 40% in equities and 60% in fixed income. It's more than possible to retire on $500K (and often even less). It just depends on what your expenses are in retirement. Where you live, how you live, and how much debt you have are the three big things to focus on. Thanks again for all of your helpful advice! 😇
@@Trust_but_Verify She's 62 and it's a "life only" annuity which means if she dies before the $300K is paid out whatever has not been paid out will go back to the insurance company. The "life only" option provided the highest monthly payment but she understands the risk if she dies early. But she doesn't have any dependents (never got married or had kids, parents are deceased, and she has no brothers or sisters) so she has nobody to leave the money to (although she did consider a charity but ultimately decided against that). The good thing is she's in perfect health - no history of heart disease, good cholesterol and blood pressure, not taking any prescription drugs, and is very active (cycling and swimming) so hopefully she'll live for 20-30 more years (in which case she could end up getting over $700K from the insurance company).
@@Trust_but_Verify She's 62 and it's a "life only" annuity which means if she dies before 13 years whatever has not been paid out goes back to the insurance company. But she never got married or had children and she has no brothers or sisters so there's really nobody she could leave the money to other than a charity but she decided against that. She's also in very good health (no prescription drugs, good cholesterol and blood pressure, no history of heart disease in her family). And she does a lot of swimming and cycling. Definitely not your average 62 year-old. Hopefully she'll live for 30 more years. If so, she'll end up getting over $700K from the insurance company.
@@Trust_but_Verify True. You can definitely do better in the markets (usually) and she gave a lot of thought to that but $620K total saved for retirement isn't a ton of money and there's always the chance of taking big losses to your portfolio early in retirement which could be difficult or even impossible to recover from (sequence of returns risk) so she decided to play it safe. The good thing is she still has $320K that she can invest for growth since all of her core expenses are covered by Social Security and the annuity. Her advisor actually wants her to be at 70/30 (stocks/bonds) but she's staying at 40/60 for now. The annuity is issued by New York Life which is one of the strongest insurance companies out there. And if an insurance company that issues an annuity goes under, every state has an association that comes to the rescue (up to a limit of usually $250K-$300K). Here's more info on that: www.annuity.org/annuities/regulations/state-guaranty-associations/.
@@Trust_but_Verify True. You can definitely do better in the markets (usually) and she gave a lot of thought to that but $620K total saved for retirement isn't a ton of money and there's always the chance of taking big losses to your portfolio early in retirement which could be difficult or even impossible to recover from (sequence of returns risk) so she decided to play it safe. The good thing is she still has $320K that she can invest for growth since all of her core expenses are covered by Social Security and the annuity. Her advisor actually wants her to be at 70/30 (stocks/bonds) but she's staying at 40/60 for now. The annuity is issued by New York Life which is one of the strongest insurance companies out there. And if an insurance company that issues an annuity goes under, every state has an association that comes to the rescue (up to a limit of usually $250K-$300K). Here's more info on that: www.annuity.org/annuities/regulations/state-guaranty-associations/.
Thank You for sharing about Single Immediate Annuity that Your friend took. Can You kindly share the name of that Annuity company?
I rather enjoy these personal stories with real life examples. Thanks, Jennifer, keep it going.
The key is no debt going into retirement..no mortgage, no car payments, no CC debt...
No unless one has good pension or other source of income
👌🏾💯
Yep damn right
And no kids…😂
@@paulpeters1739 I don’t think $400000 in IIRA can generate the income to make up the deficit
I just turned 69 and have right at 500k . I'm keeping about 25% in a mix 3 stock etfs, SCHD(30%, SCHK(50%) , and SCHG(20%. They should take care of inflation. The other 75% in a mix of Bonds, CDs and preferred stocks. I'm making about $20k in income. Plus I live in a LCOL area by choice, I like to fish and hunt.
Best financial planning videos
Its crazy. Just a few years back I read where I needed $250k to retire...well...now its $500k !! 😮 That's not going to happen. You'll have to be rich to retire. My home value keeps appreciating. Which means higher taxes every single year AND higher insurance, not to mention maintenance as it ages. Its not an asset unless I sell; and the older we get the less likely we are to move to a likely even smaller but pricier home. Even though we've down sized years ago and always lived below our means, and very frugally, all costs are continuing to rise faster than our investments 😢
People need to calculate for rising costs AND BIG medical bills too!
Thanks for telling my kids to take us out for dinner. Maybe they will watch this video ;)
I have a very similar situation as Joseph, but I think it’s important to consider trying to grow your account balance by adding equities. I only use ETF’s for my equity holdings. I have 100k in S&P 500 (IVV or VOO) which has grown 30% in the last 2 years including the recent market down turn. Just something to consider.
I only have $300,000 401k when I and my wife retired. I retired at age 55. The key is not how much you have but expenses, expenses, expenses...meaning we lowered our expenses by downsizing our house. We moved to a no state tax and low property tax state. No credit card debts and no car payments. We lived on a $2500 monthly 401k withdrawal and when I turned 62 I collected Social Security and stopped withdrawing from my 401k...Now after 10 years retired my 401k still has $250k remaining and I may not touched this ssince my wife now is collecting social security...Note since we are not yet eligible for Medicare, our coverage is through ACA (thank you).
I thought every American Citizen is eligible for Medicare. Am I wrong? Thank You for sharing
@@basamnath2883 You have to be 65 years old to be eligible for Medicare.
@@basamnath2883 Medicare is only available to those that paid into it and meet the minimum qualifications criteria….
Impressive that you can do it with 300k! When you withdraw from 401k at 55 do they hit you with the early withdrawal penalty? When you apply for ACA do they look at how much you have in savings and 40k? I always wanted to retire early but I’m most concerned about paying high premium on monthly health insurance
@@jeancai4098you can withdraw from 401k from age 55 without penalty (of course you need to pay taxes since these are pretaxed) as long as the amount is in equal monthly withdrawal and you have to be completely out of the workforce. When you reach age 59 1/2 you don't need to comply with these two conditions. For ACA they only look at current year income. We tried to limit our income/withdrawals to $50k a year so we get almost the whole premium subsidized...
Tremendous information-packed video there! Also a lot of complexities or rabbit holes for a newbie. Glad we can play it over and over. I also just wanted to throw in that people not yet receiving Social Security should keep in mind that if you take more than the most basic Medicare (most people would want to), it is going to be deducted from your Social Security payment. So don't forget to figure that into what you think you are going to receive net.
I'm at the point now retired just started getting social security, it's a psychological eye opener instead of adding to accounts to start withdrawing from accounts to make ends meet.
It’s an uneasy feeling drawing from savings instead of a regular check that we’ve been used to receiving for 40 or more years.
This was VERY helpful. A single example examined in detail -- perfect. Even if your situation is quite different, it's very helpful to hear Jennifer's reasoning.
Depends on your situation this is not for everyone. Retire overseas option. Still investing in retirement, and living well.
Jennifer -- with the market worried about fed rate cuts, this will have obvious implications for many fixed income securities. It'd be nice to see a video on what to purchase when interest rates fall. (Also, if it is second market, how to avoid purchasing a bad security.)
Interesting to see a real example. Appreciate it!
I am a new subscriber. Your videos are first-rate! Very informative, easy to understand and polished. Thank you.
Awesome video! I’m going to look into bond ladders now.
Great video, thank you.
Something I'd just like to mention that I don't hear very often when figuring out expected monthly/yearly living expenses is all the unexpected things that happen in life. Whatever I think I need I budget 10% more. Some years I'll spend less, but this year was more than the 10% I budgeted for (so was last year). Such is life.
For instance, this year I had to replace a refrigerator, garage door & other unexpected home maintenance items, set of car tires & battery, car & home insurance up 20%, attended an out of area wedding (airfare, rideshares, hotel, gift, meals). Along with a few other things we've spent close to $8,000 extra so far, and the year isn't over, ugh.
LOL, broken tooth, root canal and crown = $2,800
@@dogsarefun2 I had the broken tooth and root canal this year, too! Also $1300+ vet bill for the semi-feral cat who adopted us (lol).
Most annuities won't go up with inflation, right? So you might think it's a lot now but in 10 years, won't have near the buying power.
You can get a rider, there are hundreds of annuities out there so you can get one that can adjust to inflation. Annuities are for peace of mind.
@colleenconger5265 right but that will then lower the payment to account for the increases. Just have to account for that.
The amount depends on expenses really. Having zero debt is important. Living in NJ, but not permanently to retire here, having a minimum income if 100k would be the target. Just to live. Property taxes, income taxes, home maintenance, car, expenses. You'd need a few million to generate that. Then cushion, etc. I'd say 3 to 4 million to be comfortable.
Jennifer, Great video. I really like these personal vignettes. Regarding Joseph's vignette. What about survivorship? If he buys an life annuity and dies before 85, the annuity is terminated, spouse gets nothing. If he buys an Annuity with Survivor benefits then I believe the premiums are double. On the 15 year T Bill ladder, upon his death, his spouse/survivor would inherit the T Bills outright. So from a survivorship aspect I believe I would sleep better at night knowing that my surviving spouse would have the T Bills for living expenses. Your thoughts? PS, just signed up for the Bond Beginner Course for October.
Great video, Jen. Thank you !!!! Option one for me. I would like the security of the annuity income, because it covers the shortfall without risk, and the return on the annuity that Jen showed is much higher than I would have thought! Option one leaves a good amount of money as a cushion and for other purposes / investments. Possible healthcare costs are a 'wild card', and they could drain savings really fast.
I bought tax deferred annuity through fidelity and there was no charge.No hidden fees.I will get 5%
Usually fees are built in
I'd choose 3, treasuries are rhe safest. I'd plan on living until 100 and figuring in long term care.
For some people , it may not be how much money you have, It’s the fear of change.I have a friend with more than 5 million.He thinks it’s not enough.
Would your friend be willing to gift me $300k? That's the bare minimum I would need to retire right at this very moment and prove to him that you don't need $5 million. I'd even be willing to fully disclose my finances to him to prove that I am legit. I would use the money to pay off the remainder of my mortgage in a lump sum. Without the mortgage, I would have enough money to cover my yearly expenses until I reach 59 1/2. After that, my own 401k money combined with whatever Social Security I receive can pay for my expenses for the remainder of my retirement.
Depends on his/her lifestyle and whether they still need to put kids through school, etc
@@jaygriffiths3436 Not in the least. 62. Kids grown and gone House paid off.
@@Thisishard2333 ah, in that case he should be enjoying retirement!
You mentioned that you had several preferred companies that provided SPIA annuities but didn’t specify company names. I could not locate a video from your channel that covered SPIA annuities. Do you have a video that would cover the basics of SPIA annuities?
I think her annuity guy is named Jonathon, so if you email Jennifer, she can pass along his contact info. I would like to learn more about SPIA annuities too.
I've outlived all direct ancestors going back 200 years by a couple years now, and I'm still going. So don't be so sure about lifespan assumptions.
Most retirement planners I've seen plan for 30 years in retirement.
I'm glad you made this video Jen. It will help me decide my options in my very later years of retirement. Thanks
My wife and I have $2m and we’re both retired with pensions. We live below our means and put our two children through college. We retired at 55 and still live within our means. No money worries.
May I ask what you are doing for healthcare? I’m currently looking at options. I’ll need to buy Obamacare or something for a few years until I reach 65.
@@daver6564 our company provided health care until we turn 65.
@@daver6564 ACA silver plan. I purchased medical insurance via COBRA after I left my employer in 2013.
I then switched over to purchasing medical insurance through HealthCare.gov in 2014.
@@daver6564 we had great health care insurance through our employer until we reached 65.
My guess is they retired from a public retirement system with lifetime medical benefit.
I have a lot less than the 500K and been retire since 2016: Medical stuff and hope to take social security at my 1st opportunity.
Although I made way less than my friends for the 20 plus years I was in the military, I knew my pension would serve as my secure bucket. So I plan to stay at least 80% in the market with my IRAs taxable investments until at least my 70s. My home will be paid off before I retire from the military and the one I buy after retirement I want paid by 55. That will give me my realestate cash flow bucket.
Two of my best decisions financially was earning a military retirement and putting my money in a Roth IRA.
For higher interest rates you could try mixing in USHY, ANGL, FALN. And to hit 6-7% safely you have a variety of options with MLPs, REITs, Preferred stock. To hit 8-10% you can go with Closed End Funds and Covered Call Funds. And if you really want to go big - funds like AOD, GOF are way north of 10% in distributions.
GOF has been declining in value for 3 years now, 3 years that have been fantastic for the S&P and DJIA, so that yield pales in comparison to the loss of principal value. AOD has gone down tremendously for the last 2 decades and has flatlined for the last 12 years. If you bought back in 2007, you are down over 78%...hard to make that up with a 8.xx% dividend. I think I'll pass......smh
Great video as always. I am not sure where he lives that his costs are only $3500 per month. My property tax, condo fee, insurance (health, life,auto,home,umbrella) cable/phone/internet and utilities is more than that before eating, clothes, travel or entertainment.
My thoughts too.
Very possible if one lives alone, has Medicare, is very frugal, rent (not own) of $2000/month, minimum expenses of food, utilities, car insurance, renter's insurance, cable/phone/internet package with Xfinity, cell phone, very rarely buys clothes, very rarely travels, entertainment is riding a bike, walking, volunteering, etc. I do this and I'm in the greater Sacramento, CA area. My expenses are around $3500/month, just like Joseph's.
I live 10 minutes from NYC. My expenses are less than 3k/month. My expenses are around $2800. When i retire i can manage under $2500 but then add in health insurance
1500 rent
70 internet
70 average utility bill
200 groceries
400 eat out/happy hr (usually less)
500 travel 3-4x per yr
50 miscellaneous shopping
There are a lot of people retiring with far less than 500,000 much less a million.
Jen, could you please speak on different types of "financial advisor" out there? For instance, what's the difference between Registered investment advisor (ria) and say, a bank's Financial Advisor, or a Certified Plan Fiduciary Advisor?
Is there a federal or national standards /credentials/ need-to-know when searching for an advisor? Thank you!
Great video. At 59 I recently constructed a very similar portfolio (sep) $500k using what you have labeled Option 2. It’s nice to see some expert confirmation of my thinking. Ideally, I won’t need the income for a few years and plan to use the coupons I’ll see in that time to buy back some of the equities I had to sell in order to lock in these current yields. I’m hoping that will help recapture some of the growth I’ve had to sacrifice. As others have said: I believe the key to having security with a “small” amount of capital is debt - or the lack of it. Retire debt, live frugally, always protect your principal. And try not to forget to enjoy yourself. Love your channel!
You are always informative. Thank you! Could you please talk about how to get the best annuity rates NOW (before the for sure interest rate cuts coming up) so I can make a decision to purchase an annuity NOW to LOCK IN NOW for 5 years the highest yield? MYGA, Fixed-Indexed , Deferred is my preference . Timing is of the essence. Online tools for comparison? Top, reputable companies? Can I buy it myself without an insurance agent? High rate, safety, easy to work with companies are my priorities. 💐
Jen, please do some videos about how to make money via "hard money lending".......thank you.....
What about end-of-life health expenses? Not talking about mere annual checkups and prescriptions. We all will inevitably require long-term care at exorbitant costs. Some will be lucky to get help from children or DIE QUICKLY or efficiently enough soon after slowing down. Others may require years of care at six-figure annual expenses. Do we plan for it financially? Imagine burning 200k in what you think is your last year or two, then suffering broke as a complete invalid on social welfare for several more years.
I bought Long term care when I was in early 30's for me and my wife. I am glad I did. I have been paying 550$ per ANNUM (not monthly) for both of us. Now I am 55. My friends of my age when tried to buy LTC, they were given a quote of 13K per year premium for both husband and wife. Daily 300$ for home nurse care which is 9K per month payment per person. Total max LTC care is 350K per person.
In holding a policy for so long, would the originally declared coverage still apply? And does it scale with inflation? If you live healthy for another 20 years before needing to draw coverage, will it be enough? I'm thinking of getting an annuity with LTC rider. It's also better cost the younger age you buy in, but with an annuity, the payout is monthly money for living expenses. Hard to find though from a reputable carrier.
@basamnath2883 would you mind sharing who your policy is with?
Wow! There was a ton of great information in the 3 investment scenarios. The only thing I'd be concerned about with an SPIA is ensuring to customize it so there is a cash refund if I happened to die before receiving the entire principal plus the interest that principal generated.
I appreciate your video. It's full of information that a lot of people can use and, especially me, can learn from. I have always held that owning the bonds, not bond funds, is the way to go. Your info on doing that is helpful. I also have annuities. One is already paying me pretty nicely. The other will provide an income increase in a few years. (That's my inflation protection) Well done and thank you for your insight. Cheers
Are annuities through top notch insurance companies safe? As short term T-Bill rates are coming down below 5%, you can still get 5% in an annuity. Thoughts?
good to know Thank you.
Great information!
it depends on your expenses, if you have a pension, how much SS will you get, factor in inflations, I use 3.37% for inflation
Great videos maam. Thank You
You have such an IMPRESSIVE Best of the Best presentation and it look like I am ADDICTED to your program. With respect to this section decently it should be mentioned REDUCTION of LESS CONSUMPTION and also MAJOR HEALTH issues that should be on people mind. Older people don't want to ask financial help from their kids. 💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗💗
MYGAs 2-10years paying over 5%. good option for option #2.
Annuities can be messy and confusing, plus if you make a mistake too late. SPDA - SPIA -
NON-QUALIFIED/QUALIFIED ANNUITIES , fees, beneficiaries etc. IF you have a nice sum that, in your mind you will never touch and want something somewhat "guaranteed" then yes an annuity may be the way to go but there is a lot of work to choose wisely.
Easy choice SPIA only.
Thank you, Jennifer. As far as suggestion for Joseph. A wise friend suggested I estimate retirement income and try to live 2 years on 60 or 70% (was in high tax california at the time). That was an eye opener as things popped up during those 2 years that were surprises.
My personal results. I worked an extra year ( easier to work on existing job than find another after retirement if there were more surprises). Completely NO debt. Downsized and moved out of california. Realize that SSA cola likely won't cover your inflation costs, so get creative.
Option 1 plus a low intensity part-time job or side hustle. Unforeseen expenses are real, and if one is lucky enough not to have many, he can invest the extra (or spoil the grandkids 😂)
does Joe have any real estate that he will liquidate later in life while downsizing for a capitoal gain(post tax) that is considered in this calculation?
Not include the senior care at later age ???
$10K per person per month expenses at later life. $120K per year per person. Million dollar is not enough.
This video just came up in my UA-cam feed (12/01/24) ...
Many great points and options
But one could also build a MYGA (Multi-Year Guaranteed Annuity ~ which is essentially a CD issued by an insurance company) ladder
Rates are still in the upper 4% to just over 5% range APY for up to 10 years of maturity
Interest is deferred, and there are options for liquidity of portions of the amount such as 10% per year or Interest per year depending on the policy
~ with a ladder of multiple policies, that could spin off the needed income from interest and retain the principle for redeployment at end of contract
Excellent
Reduce expenses and start living life like a monk and still enjoy life thoroughly in peace, joy and complete happiness!
If you buy an annuity or treasury, will your money be locked up in case of an emergency? Odds are Joseph will not be in perfect health for the rest of his life. He may have to go to assisted living. That money in an annuity/treasury could pay for his assisted living for a few years. On average, people live in assisted living for 2 years before they pass away. Something to think about. I guess they will probably give you the money back, but I wonder how much they might charge as a penalty. I am just thinking out loud, and I don't know any of this for sure.
What do you think Pdi it has been paying 22 cents for quite a long time monthly
I was going to make a separate comment about several Pimco bond funds which have been paying out a steady ~ 10% pa on a monthly basis for quite a while. PDI is one; we also have PCN and PTY. Jennifer, it would be interesting to hear your views on funds like this, which offer much better yields than treasuries.
Why not consider MYGA annuities? Some are paying over 6%. That is what we are doing. They are like bonds. We are purchasing them in our pretax IRA accounts.
Kudos, great video.
Very well said
Thank you really
This is fantastic.
Awesome video
Just a heads up, depending on how and how he pulls from his accounts, his sep ira could be tax free also. Tax planning goes a long way.
Thank you very much, Miss Jennifer.
I am constantly searching for ways for passive income..
The worst in my experience is that your children have drained savings over the years but your parents are currently draining them going forward
Why not BND or Vanguard Treasurys (VUSXX)?
Or you need a CALPERS pension but you have to work 30 years in a state or city job-$100K USD annually with COLA!
Good advice for any job seekers to explore state or federal jobs offering pensions. They can start with as little as 5 or 10 years employment.
So I know nothing about annuities. I was looking at the example payout for $100k, are the interest and payout amounts fixed at the time of investment?
Hi! I have added this onto Jennifer's live member Q&A for today. Best - Eva
Question on bond investing. Say a year ago I bought a bond with a coupon rate of 4% at 100, maturity, January 1 2026. By the end of the 2024, fed lowers interest rates by half a percent. With Fed funds rate at 3.5%. My bond is now worth 105. Better me for me to sell before maturity at 105. if I wait for maturity, I’ll get 100. Correct?
If you hold to maturity, correct, you will get 100. But whether it's better to sell at 105 is debatable. If you sell, the profit would be a short term capital gain, which is not state tax exempt like treasury interest. Also, if you want to reinvest the money, it would be at the current, lower rate.
@@DavidLitman-ph9lu yes. True. Thank you. However, if we continue to play the bond game and anticipate interest rate dropping over the next year or two. Sell my 105 which matures in about 12 months and take the capital gains. Take the proceeds and buy a three-year note which is yielding about 3.7%. I’m assuming interest rates will drop another two or three 1/4 points within twelve months. In a couple years, we would be in a position to take capital gains yet again by selling these three year notes early. Does this make sense?
@@Dean-p3k Makes sense on paper, but no one knows for sure that rates will continue to fall. Like DNE says, everyone's journey is different, good luck with yours!
@@DavidLitman-ph9lu thank you
Without knowing more detail, it appears to me that Joseph is entirely too conservative with his investments. As interest rates start to decline it will get even worse. He needs to have some exposure to equities and maybe some real estate investments. He will survive on that half million, but won't be living what I consider to be"well" (travel, hobbies, transportatoin, etc).
If his home is paid for and he isnt leaving it to familiy, J could consider a reverse mortgage and (in Cali) possibly double his current portfolio. Then consider using his lifetime of knowledge and expertise to create a small passive income stream .
Fixed rate on current I-bonds is looking good until the next cycle. He may want to put 10k in there.
Great content. Have you looked into buffer ETFs? They may be appropriate for a portion of this man’s retirement funds in that they provide the opportunity for appreciation with zero downside risk.
There is no reason to pay 20% tax on the SEP. Simply withdraw up to the standard deduction. $0 tax.
Federal taxes are due on SEP RMDs. When you say standard deduction, do you mean RMDs?
I'm not getting the " 21 year spend down with a 20K shortfall."
Wouldn't the money he made off the 531K investment every year (around 26K at a safe 5%) cover the shortfall?
I would be afraid to go out 15 years in todays bond market.
Should have done it when 10 yr was near 5%
😂
Anyone have a contingency plan in place in case social security cuts benefits when they run out of money?
I'll probably be looking for a Kevorkian machine. Should be able to find one used in pretty good shape for cheap. lol!
Yes. I am planning for a 25% cut.
Excellent recommendations based on the criteria discussed.
Yes Joe can retire with no problem. Mainly if his house is paid off and credit cards . It’s a doable amount . I would know I did ! I am close to his numbers
I'd say $2,000,000. I am roughly on schedule to make that at age 66.5.
Thank you very much for this Terrific Video !...
Joseph's 500k should generate the 20k or more annually without principal going down.
I Need 5 million.
start saving then
@@gregh7457 i already got that :)
Not enough for me. But it depends on your age and debts and expenses. I am 57 and have about $10 M and while I realize that’s a LOT my expenses are very high. I have 2 houses boats etc. everything is paid but ongoing maintenance and taxes insurance etc adds up. If I was 65 I would retire today. But being 57 and still paying for kids college I would like to get around $2 MM more plus continue earning for a couple more years to pay my expenses. I get to do most things I want within reason and travel etc because my job allows me great flexibility. But I won’t lie it gets harder each day to go to work!😂
Wow 10m and cant retire? Wow! 10M in an SP 500 like VOO avg 11% or 1.1M per year. Congrats on your finances. Im 51. I have 1.5m my wife has 500k. She is 50. Im retiring in 6 months. Im tired. Time flies. Last week i was 30. I want to enjoy doing other things. My house is paid off. No boats! 😂. Bro i know is not my business but dont wait too long to enjoy your time here. If you love your business then ok but if like me your tired of it. Stop wasting your most precious asset. Your Time. Its not worth it
Same here. Plan your RMD
@@rriqueno you sound like the angel on my shoulder arguing for retirement with the devil who says nah keep working. As I wrote my comment I will admit I was embarrassed to even admit these facts. Ive never been about flash or showing off or anything. I have always been frugal and really just saved and built my way slowly into having more things and just spending more. Part of it is my own insecurity with money. Having worked since I was 12 and always saved it seems only natural to keep doing it. I dream about retiring but it freaks me out to not earn and save anymore. I could afford to retire right now by simply downsizing some. My money is split about 60/40 stocks and t bills. The dividends and interest generate enough income to cover my expenses Without having to touch the principal. I do still support my kids and their college costs but that’s manageable. The more I think about my situation the more I am beginning to realize that it’s all psychological. I have to just jump in that retirement pool and stop worrying about the water being cold!! I have a feeling I will do it within a year. And then I’m off to Spain for 3 months!🍷
@@GP-fw8hnHubby & I are 56 & 60yrs old respectively. While he worked for corporate America, I built wealth through LT rentals & occasional flips over the 30 years. He retires from corporate America this Friday after my begging & pleading for 5 years. He has your work ethic mentality, & I’m extremely disciplined, focused but more than ready to enjoy the fruits of our labor. We’ve grown apart & have accumulated 10M in assets with absolutely no debt. That’s what happens when you grow your wealth & disregard fun, your marriage & working as a team. Maybe your “work until you’re 70” feeds your ego, but don’t starve your wife in the process. Don’t delay gratitude. Thank God we’re in great health, super physically fit & have $$, but it’s sad to know I’m sharing what should be the best years of our lives with a stranger.
@@GP-fw8hn I retired a few months ago, years earlier than I expected, with
I would think the 5% he makes on these investments would cover his shortfall.
20 million!!!
5% of 500k is 25k a year which cover the short fall. Basically after 20 years he still have 500k
I would go for option 1 and add some equities for growth
Please do a video regarding new laws for RMDs for inheritted Roth IRAs. Thank you!
The 600-pound Gorilla is inflation/devaluation. SS Payments will underperform the true loss of purchasing power which means the 20k shortfall will grow every year.
The government has a vested interest in understating inflation numbers because it reduces their SS liability.
Anyone who buys an annuity will also see their purchasing power diminish.
Joseph needs a part time job! He needs more income!
Fantastic insight. I just cracked a million in my dividend portfolio, investing with the help of an finance advicer who trades for me.
Well said. . Who's this person & how can I reach out for help? She's Emmennet Jaccque Barrett. Look her up
Is Ally having a hard time right now.
This video gives me hope. USD500,000 to bridge someone through retirement and onward to heaven elates me. If this video is strictly applicable to only Americans, then it helps me understand why Americans are so positive and happy.
Well, I hope so since I have about $350k with SS and a pension.
Pensions are a lifesaver when it comes to how much you need for retirement savings.
You must have read my comment from a few videos ago. Or, perhaps you have a crystal ball!
Not even close. 1.5-2 provided you are in good health and your home is paid off.
Depends on how far away you are.
@@JohnDoe_1609 American economy won’t be able to sustain any serious interest rates anymore so expect 2.5-3% tops in T-bills. Put 1.5 million in for 45k pre tax in interest. That’s about 3k per month plus the social security and other things. Minis property taxes and the rest of recurring bills. Cook at home, don’t buy expensive cars and you can sustain yourself for 30 years I think. Probably you can afford one trip to Europe per year with your spouse. I have 2 kids in middle school so it complicates things a lot.
Move to Indiana!
Wonder how safe the treasury is w the debt and new administration?
How can you be sure his ssi of 21000 won't be cut under Trump ?