I think replacement ratio is high risk. Better to take gross income now and subtract your savings. Add in healthcare (especially pre-medicare). But maybe the better question, is how to determine if spending is too high... Making predictions is dangerous, especially about the future.
Agree ! In my older videos I’ve given that exact solution for figuring out your retirement budget … salary minus savings minus debts that will be paid off + healthcare.
Interesting video. Retired 5 years ago comfortably. Now, cant spend down the earnings, never mind the capital. Dont want to accumulate a bunch of junk.
The number one risk in retirement is health(and death). For most it is also the most unpredictable. Certainly significant health issues can develop fairly early in retirement. It is not necessarily a risk that increases spending, and in fact often decreases discretionary spending since people can’t do as much. Many health problems cause functional problems without being expensive to treat. Think joint issues, obesity, falls, hearing, eyesight, and minor cognitive problems. Respiratory and cardiac problems can be serious and more expensive and also very limiting. The random one is always cancer which is expensive, often limiting, and frequently ends in death or disability. Also the discretionary activity of a couple such as travel is generally determined by the health of both members. If one is unhealthy, both are seriously affected. In a minority of cases costs go up with poor health, but in most cases they don’t. Spouses are usually the primary caretaker of their partner. This incurs no financial cost. Single persons are at higher financial risk from health issues, but they also have the option of spending down to zero, and will still get care. A relatively uncommon, but financially difficult scenario is when a spouse can no longer be cared for at home and requires LTC, yet the couple has large amounts of assets. In that scenario outflows can be high since they “can afford it”. Couples with minimal assets are not usually required to spend them to the point of making the healthy spouse destitute. My viewpoints come from being a physician(retired) that worked extensively in the LTC industry in Florida, and also watching family members go through these issues. The takeaway is to enjoy life while you are able., and front load spending for fun stuff. Remember that one half of people die BEFORE the average age of death! The current average for a person age 65 is about 82 for males and 84 for females. Half of us will NOT have even 20 years of retirement, let alone 30 or more. My wife’s brother died at 59! Obviously have contingency plans for the back end, but I would not try to preserve large amounts of wealth for LTC in old age. If you want to leave inheritances, consider giving when younger, or giving it to the grandkids. If you die at 88, your kids are likely at the point of their own retirement, when your assets help a lot less. My wife is still “waiting” to inherit her 87 yo mom’s house, and my wife is 67 and on SS. We don’t need the money and it is not part of our plan!
Stumbled across this video by accident. As an Australian, some issues are very different (health care, aged care and taxes) but I did want to say well done for a great, well-explained video!
I lucked into this stuff by retiring 22 years ago at 45 without a pile of cash. I had to be frugal from day one. My security was I was a software engineer and would have no problem turning the cash back on. So I never had a budget, just want vs need and cost. I had a rule all hobbies had to cost $0 or almost AND have the potential of earning money. I wanted all hobbies to teach me a sellable skill. Past 15 years my total spend has been about $600/mo. Funded retirement by slow flipping my house. Working on house #4. Will sell next year and move to SE Asia. My spending going to increase maybe 5x to maybe $3k. Budget will be $6k so OK. Part of that move is to prepare for the cost of extreme old age. A live-in housekeeper there with some elder care is $100-200/mo USD plus food. Live-in trained caregiver is $500-1000/mo. These are world famous caregivers. So I think my spending on a graph looks like Popeye's mouth.
In Canada, the no go phase is usually the lowest spending phase. For Canadians I recommend Fred Vitesse’ book Retirement Income for Life. He uses Canadian actuarial data to backup his recommendations.
Hi Nick, I would have interest in knowing what a client should inspect in regards to an advisor contact annually, through a five year countdown to retirement along with annual topics to address and cover.
I've been retired for ten years, and I'm spending a lot more than I spent when I worked. But since I have been very successful at saving, and I am still a net saver, I'm not worried. Base expenses are 20% of income, so I can buy a lot of discretionary items and still have plenty of money left.
I cry every time I think about retiring. I sincerely apologize to everyone who applied for social security at this time after years of hard work and retirement and lost everything as a result of an unforeseen event. It's challenging especially for those who are retired.
I think replacement ratio is high risk. Better to take gross income now and subtract your savings. Add in healthcare (especially pre-medicare).
But maybe the better question, is how to determine if spending is too high... Making predictions is dangerous, especially about the future.
Agree ! In my older videos I’ve given that exact solution for figuring out your retirement budget … salary minus savings minus debts that will be paid off + healthcare.
I'm 74 and we are spending more than ever. And having a great time.!
Sadly, no comments for any of us who lost our spouse. We are alone now. So this changes everything.
Interesting video. Retired 5 years ago comfortably. Now, cant spend down the earnings, never mind the capital. Dont want to accumulate a bunch of junk.
The number one risk in retirement is health(and death). For most it is also the most unpredictable. Certainly significant health issues can develop fairly early in retirement. It is not necessarily a risk that increases spending, and in fact often decreases discretionary spending since people can’t do as much. Many health problems cause functional problems without being expensive to treat. Think joint issues, obesity, falls, hearing, eyesight, and minor cognitive problems. Respiratory and cardiac problems can be serious and more expensive and also very limiting. The random one is always cancer which is expensive, often limiting, and frequently ends in death or disability. Also the discretionary activity of a couple such as travel is generally determined by the health of both members. If one is unhealthy, both are seriously affected. In a minority of cases costs go up with poor health, but in most cases they don’t. Spouses are usually the primary caretaker of their partner. This incurs no financial cost.
Single persons are at higher financial risk from health issues, but they also have the option of spending down to zero, and will still get care.
A relatively uncommon, but financially difficult scenario is when a spouse can no longer be cared for at home and requires LTC, yet the couple has large amounts of assets. In that scenario outflows can be high since they “can afford it”. Couples with minimal assets are not usually required to spend them to the point of making the healthy spouse destitute.
My viewpoints come from being a physician(retired) that worked extensively in the LTC industry in Florida, and also watching family members go through these issues.
The takeaway is to enjoy life while you are able., and front load spending for fun stuff.
Remember that one half of people die BEFORE the average age of death! The current average for a person age 65 is about 82 for males and 84 for females. Half of us will NOT have even 20 years of retirement, let alone 30 or more. My wife’s brother died at 59!
Obviously have contingency plans for the back end, but I would not try to preserve large amounts of wealth for LTC in old age. If you want to leave inheritances, consider giving when younger, or giving it to the grandkids. If you die at 88, your kids are likely at the point of their own retirement, when your assets help a lot less. My wife is still “waiting” to inherit her 87 yo mom’s house, and my wife is 67 and on SS. We don’t need the money and it is not part of our plan!
Stumbled across this video by accident. As an Australian, some issues are very different (health care, aged care and taxes) but I did want to say well done for a great, well-explained video!
I lucked into this stuff by retiring 22 years ago at 45 without a pile of cash. I had to be frugal from day one. My security was I was a software engineer and would have no problem turning the cash back on. So I never had a budget, just want vs need and cost. I had a rule all hobbies had to cost $0 or almost AND have the potential of earning money. I wanted all hobbies to teach me a sellable skill. Past 15 years my total spend has been about $600/mo. Funded retirement by slow flipping my house. Working on house #4.
Will sell next year and move to SE Asia. My spending going to increase maybe 5x to maybe $3k. Budget will be $6k so OK.
Part of that move is to prepare for the cost of extreme old age. A live-in housekeeper there with some elder care is $100-200/mo USD plus food. Live-in trained caregiver is $500-1000/mo. These are world famous caregivers.
So I think my spending on a graph looks like Popeye's mouth.
Great video, Nic! Love the content and your channel!
Thanks so much!
I’m experiencing this spending in my go go phase
In Canada, the no go phase is usually the lowest spending phase. For Canadians I recommend Fred Vitesse’ book Retirement Income for Life. He uses Canadian actuarial data to backup his recommendations.
Lots of useful info
Hi Nick, I would have interest in knowing what a client should inspect in regards to an advisor contact annually, through a five year countdown to retirement along with annual topics to address and cover.
@7:24 ok, ok, no golf shirt for me.
Could you review project 2025 and what hat would mean for retirement
Take you net income, total debt/expenses then compare your retirement income
Very nice topic , and unique
If your kids are doing fine without your help, then spend it.
I've been retired for ten years, and I'm spending a lot more than I spent when I worked. But since I have been very successful at saving, and I am still a net saver, I'm not worried. Base expenses are 20% of income, so I can buy a lot of discretionary items and still have plenty of money left.
I cry every time I think about retiring. I sincerely apologize to everyone who applied for social security at this time after years of hard work and retirement and lost everything as a result of an unforeseen event. It's challenging especially for those who are retired.
shannon Actrice