Because they don't have spending under control I retired at 52 with less than half of that. 7 years into retirement and I have more money today than I did when I retired 7 years ago. Some people are just stupid and don't get it. Retirement is awesome. I don't deprive myself either. 20 cruises in the past 2 years and I travel all over the place just on a budget.
A lot of people don’t understand how much money you need to retire when you are used to a certain lifestyle and when you like to help kids and grandkids. I’m 63, single, and have $2M saved. But I still have a mortgage (which is a very manageable $1700 a month), I’ve been able to afford luxury travel the last few years and am not ready to give that up, and my daughter likely will go to medical school and I’d like to pay for some of it. And I’m paying $1500 a month toward my mother’s nursing home care. I’ve had a very good income over the last 7 years (which allowed me to go from $1M to $2M in savings during that time) and I’m just reluctant to give it up. So I’ve decided to work until I hit $2.5M, which should be around the time I turn 65 in 1 1/2 years, as long as the market has average returns during that time. I know I’m trading money for time but my goals are important too - plus I have a really great life right now - 7 weeks of vacation a year, luxury trips, dining at Michelin starred restaurants - things that I wasn’t able to afford until very recently and that am really enjoying. Life is good when you are at your peak earnings potential.
I retired at 61 and am 65 now. Social Security takes care of 90% of our living expenses. Our primary residence was paid off in 2000 and we've had no debt since then. We paid for our kids' college educations out of salary and a little bit of savings. Savings rate after 2000 was 38% except for when the kids were in college. So don't live large, save like mad, teach your kids to save like mad and hope that you have a decent amount of luck along the way. Our income, when I was working, was less than half of what this couple makes. This couple makes more money than probably 93% of the rest of households and their net worth puts them in the upper class. But expenses can always outrun income and assets.
With their salaries and less than 2 million in savings says a lot about Greg and Norma's spending habits. They are not serious savers. Not bad, but definitely on the low end of savers.
The best investment these folks can make is a course on frugal living. For example, the grandkids can go to community college and live at home for the first two years (as I did) and transfer, saving almost half of the college expense. A boat is a hole in the water that you pour money into. People need to grow up and realize by the time they are in their 60s that there is a lot more to living than spending.
I'm in a similar situation, but I think a little better. We've got a bit more money invested, we don't have any debt, no kid's educations to help with, and we don't want anything to do with boats, though we do have other somewhat above average expenses. I just retired at 63. My wife is still working part time. Her working doesn't bring in much money but she enjoys what she does and wants to keep working for now. We've also got some rental farmland that brings in a little money. It's not much but it's reliable. Our plan shows we could pull out a certain amount from investments with a very high confidence level, but we're pulling about $2 - 3K less than that because we just don't need the money right now.
I find that when you love what you do part time, it really adds to life rather than takes away.. as long as it doesn’t get in the way of the other things you want to do.
They should have saved a lot more than $1.5M with those high incomes. Plus, why is housing cost so high in their retirement ages? Get rid of mortgages or downsize before retiring. Like others said, they have spending problems not income. $1.5M should plenty to retire on.
Increases in Taxes, insurance, maintenance,inflation are serious factors in delaying retirement. Also how many family members depend on you, I.e. parents or impaired family members…everyone’s lot is different.
I think the home equity is interesting in this case. You mention the value of $700k and that would presumably go up. Whether or not they use some equity for her long term healthcare, wouldn't the sale of that home meet the $500k legacy requirement? Or - it could be sold as he enters long term care and then you could wipe out both of those expense items (hers and his) but still keep the $500k cash legacy. Either use the home equity / sale for both of their long term care costs, or use it for the legacy goal.
Their big mistake is sacrificing their retirement to fund their grandchildren’s college. Also, 529s suck. There are too many restrictions on how to invest with them and what they can be used for. Read Die With Zero and change your mindset on life and retirement. The grandchildren will get a lot more out of life experiences with the grandparents than having their college partially funded.
$1.9M at 61 not being enough means you plan on spending at least $100k/year as old people. If that is the case, you don’t deserve to retire at 61 and have fun at work
Terrific Video. I really appreciate the thought process you take them (us) through and how to evaluate. Cutting the boat cost in half drives home a powerful fact: Duration can be more impactful than amount.
It's certainly doable to own a boat in retirement, but you need to be very realistic about the budget including inevitable big ticket items depending on the size and age of the boat. Not retired yet and I own an older cruising boat - I budget $1200 per month based on 20 years history and regression analysis of the cost of fuel, insurance, maintenance, and sufficient reserves for big ticket items.
I'm close to all of these numbers (in two years, when I'm 61, I should be at these numbers). At this point (five more years), I'm working to at least 65 and may go to 67... for similar reasons. Each additional year I work makes a dramatic difference. Paying into retirement and my mortgage at over $100k per year is hugely better than drawing down my nest egg by a similar amount-so each year is a $200k+ swing in net worth and investment.
the legacy feels like something you’d aim for but not guarantee - with such variance of returns etc you could plan to leave on average 500k but with accepting risk it may get burned if things go bad, or could be a lot higher if things go well?
I WAY overestimated how much I would spend in retirement. I am spending less than half of what I planned for. A huge factor was having a paid off mortgage. We are generally living off social security, plus some other mineral interests. Five years into retirement, I have yet to take a penny from my IRA. It has increased by 35% since I retired. Still able to take nice vacations, and do whatever we want.
It’s pretty apparent they just wanted to keep spending. A bad plan. Common sense says that heading into retirement you should ideally be debt free and not have a lot of other financial burdens.
i think i know my financial choices. what i need to know are where are my gaps, choices i am unaware of. but MORE importantly, how to WEIGH these choices. it is easy to get education on the plethora of strategies... i do not know how to weigh them against my financial reality and ESPECIALLY against an known future 30 years down the line.
Great question. Someone else pointed that out too. No, because the $500k is a goal to pay from the accounts. The LI dumps into the plan at death but the goal needs to be paid out to come to pass.
I think what is most telling about this comment section is that most people believe they should map their own values and what is important to them to dictate how all others should behave. We are all different, have different values, and are willing to sacrifice different things. Plus the calculus is very different for someone who loves their job versus someone who hates their job or someone who gets a huge amount of pleasure from an expense versus others who don't.
Why would you lock the College fund money into a 529? There is no guarantee any of them will be college material and now you limited the use of the money. Instead use the Roth IRA for this purpose. Then you can either use it for education or retirement.
They spend to much and don't live in the right area ill retire with 1.2 million and will have around 30k to blow each year so i think ill be fine and be able to do some stuff.
Thanks so much for the great video. It is really helpful to see the options and factors to consider. Per your discussion of breaking out medical expenses, vacations, etc., what is the typical way financial advisor fees are reflected within Right Capital? Are they built into the program or should you account for them in your budget or a line item. You got me curious as you discussed breaking apart the other expenses :). Thanks again for the really helpful videos. I've watched several of yours and I appreciate your thoughtfulness and the details. Really helpful!
Great detailed video! Hope to be in similar situation so really brought it home. Assuming rent is also the same as mortgage and not to be included in the $7k spending? We plan to sell our house, move to a LCOL location and rent and leverage equity to do some Roth conversions at 60. I am mostly scared of RMDs and the large tax bill looming! 😅
Glad it was helpful! Rent would need to be included, in this case, the $7k would be in addition to what they pay for rent… (they are paying mortgage- but just swap them out)
I retired at 61 with $2.2M, and only one debt…....my mortgage. I drive a porsche 911 and a Tesla and I’ve already funded three college bills for my three sons. It’s 3 years later and I’ve not spent any of my original money and made $352K on the market. I’m planning to take my SS at 65 as there’s no way I’m waiting and have the feds keep my money any longer. My home is $1.5M, and owe $$400k in debt on my mortgage. I’m loving life. A boat..never again it’s a black hole that sucks money
Greatly appreciate the video! Can you please elaborate on what makes up the healthcare expenses beginning on year 2028? Although it looks high to my untrained eye, I am wondering if this is one expense category I cannot say I fully understand or have accounted for adequately in our numbers, and I dont want to find out too late that we should have projected more for it either.
I retired at 47 with less than 1M. I’m living a great life . First I moved to a low tax country, Uruguay. Paying private health insurance for 50usd monthly .I bought a huge house near the beach , on summer I rent ir , a few rooms as a hobby meeting people all around the world . Vacations 1or 2 a Year . 7 years of retirement I increase my capital by 30% . . If you want to retire young you can move to places like Argentina , second largest city you can rent a 2 bed apartment for 200usd , live very confortable for less than 1000usd a month . While you enjoying life you can use only a small part of your earnings while reinvest the rest for the time you want go back to your country .
I don't understand spending $7k/mo NOT including housing! What kind of cable tv plan do they have? Is their power bill really that high? Is there a bitcoin farm in their basement? Are they eating out daily? Leasing 5 luxury vehicles? Oh well. Different strokes. 😂
Instead of leaving a 50,000 cash legacy to heirs, why not leave them the house? It'll be worth far more than 50,000 by the time they both pass on. They are foregoing early retirement to leave that legacy. How about YOU spend the money YOU earned/saved/grew and let your heirs worry about THEIR money?
My retirement was just last month. Having pre-tax income of $5.7 million, I did follow my one-time advice from Lois Jean Frueh Since I have an inherited $700k that I have to spend down in seven years, I had to do it all at once. I'm currently 59 years old. I have $3.5 million in Roth since I have a pension. Stocks worth $4.5 million are taxed. I'm starting to give my kids gifts now, as you stated, to help with a house down the road. I am no longer suffering with rmd. Children receive it free of tax. The only thing my wife has is $600,000 before taxes, which I may need to convert at some point. I'm attempting to avoid paying for Medicare, but it appears like I will have to for a time. I am unable to even deplete my pension each month. excluding the remainder of my investments.
I have double their retirement savings and would not be comfortable with their proposed spending. Halfway through this video I was thinking they have a choice, work a couple more years or sell the boat. 20 years of mortgage payments in retirement is an indication of poor planning too.
Their retirement savings is way too low with both earning over $100K each. They’re not saving enough. They should double their paycheck deductions and retire at 65 years each. He retires first, then she retires at 65. Long term care is self funding. There’s no insurance that guarantees senior care at assisted living or skilled nursing facility. They should have $7 to $10K a month available for such a scenario in future dollars. Healthcare is Medicare at 65. That’s why she should work until 65 and offer her healthcare to her husband. Offering scholarships to grandchildren is unnecessary. Just offer a flat amount if they insist, but an open ended 2 year of expenses is a blackhole. This is not the best example since they are obviously the 1% couple who are completely clueless about finances.
After certain generational SS and Medicare reforms sometime within the next 10+ years…a video like this one day will be more like why can’t we retire at 67+ with $3+ million. 😢
We live in the land of plenty and for most it is NEVER enough. 🤦♂️ If someone makes $1M and spends $1M+$1 they are poor. This is what I call “poor millionaires” 😂😂😂😂 With all that said it is their freedom to live what ever way they want.🤷🏻♂️
Imagine being 62 yo, pratically $2M in savings and $60k in SS and have to work longer to sustain your way of life. Crazy.
i love the primary goal being passing down generational wealth via education.
Because they don't have spending under control I retired at 52 with less than half of that. 7 years into retirement and I have more money today than I did when I retired 7 years ago. Some people are just stupid and don't get it. Retirement is awesome. I don't deprive myself either. 20 cruises in the past 2 years and I travel all over the place just on a budget.
20 cruises ! I’d weigh 300 LBS
“ends got to meet”
“It’s not what you make it’s what you keep”
$2k a month for a boat is eye opening.
Thanks, Nick, for the excellent content. It was very well done!
Glad you enjoyed it!
Get rid of the boat, rent one when you want to go out
Agreed! But, have you ever met “real” lake people? They would NEVER! jk… I sympathize as I love being on the water myself.
A lot of people don’t understand how much money you need to retire when you are used to a certain lifestyle and when you like to help kids and grandkids. I’m 63, single, and have $2M saved. But I still have a mortgage (which is a very manageable $1700 a month), I’ve been able to afford luxury travel the last few years and am not ready to give that up, and my daughter likely will go to medical school and I’d like to pay for some of it. And I’m paying $1500 a month toward my mother’s nursing home care. I’ve had a very good income over the last 7 years (which allowed me to go from $1M to $2M in savings during that time) and I’m just reluctant to give it up. So I’ve decided to work until I hit $2.5M, which should be around the time I turn 65 in 1 1/2 years, as long as the market has average returns during that time. I know I’m trading money for time but my goals are important too - plus I have a really great life right now - 7 weeks of vacation a year, luxury trips, dining at Michelin starred restaurants - things that I wasn’t able to afford until very recently and that am really enjoying. Life is good when you are at your peak earnings potential.
I retired at 61 and am 65 now. Social Security takes care of 90% of our living expenses. Our primary residence was paid off in 2000 and we've had no debt since then. We paid for our kids' college educations out of salary and a little bit of savings. Savings rate after 2000 was 38% except for when the kids were in college. So don't live large, save like mad, teach your kids to save like mad and hope that you have a decent amount of luck along the way. Our income, when I was working, was less than half of what this couple makes. This couple makes more money than probably 93% of the rest of households and their net worth puts them in the upper class. But expenses can always outrun income and assets.
With their salaries and less than 2 million in savings says a lot about Greg and Norma's spending habits. They are not serious savers. Not bad, but definitely on the low end of savers.
True!
The best investment these folks can make is a course on frugal living. For example, the grandkids can go to community college and live at home for the first two years (as I did) and transfer, saving almost half of the college expense. A boat is a hole in the water that you pour money into. People need to grow up and realize by the time they are in their 60s that there is a lot more to living than spending.
I'm in a similar situation, but I think a little better. We've got a bit more money invested, we don't have any debt, no kid's educations to help with, and we don't want anything to do with boats, though we do have other somewhat above average expenses. I just retired at 63. My wife is still working part time. Her working doesn't bring in much money but she enjoys what she does and wants to keep working for now. We've also got some rental farmland that brings in a little money. It's not much but it's reliable. Our plan shows we could pull out a certain amount from investments with a very high confidence level, but we're pulling about $2 - 3K less than that because we just don't need the money right now.
I find that when you love what you do part time, it really adds to life rather than takes away.. as long as it doesn’t get in the way of the other things you want to do.
They should have saved a lot more than $1.5M with those high incomes. Plus, why is housing cost so high in their retirement ages? Get rid of mortgages or downsize before retiring.
Like others said, they have spending problems not income.
$1.5M should plenty to retire on.
Increases in Taxes, insurance, maintenance,inflation are serious factors in delaying retirement.
Also how many family members depend on you, I.e. parents or impaired family members…everyone’s lot is different.
I think the home equity is interesting in this case. You mention the value of $700k and that would presumably go up. Whether or not they use some equity for her long term healthcare, wouldn't the sale of that home meet the $500k legacy requirement? Or - it could be sold as he enters long term care and then you could wipe out both of those expense items (hers and his) but still keep the $500k cash legacy. Either use the home equity / sale for both of their long term care costs, or use it for the legacy goal.
Their big mistake is sacrificing their retirement to fund their grandchildren’s college. Also, 529s suck. There are too many restrictions on how to invest with them and what they can be used for. Read Die With Zero and change your mindset on life and retirement. The grandchildren will get a lot more out of life experiences with the grandparents than having their college partially funded.
$1.9M at 61 not being enough means you plan on spending at least $100k/year as old people. If that is the case, you don’t deserve to retire at 61 and have fun at work
Terrific Video. I really appreciate the thought process you take them (us) through and how to evaluate.
Cutting the boat cost in half drives home a powerful fact: Duration can be more impactful than amount.
It’s way more than enough. Plus, add any pensions, social security, etc. Get your spending under control..that is the problem.
Boats are bad financially. We used to do boats. A vacation house makes more sense we found after doing both in succession.
Get rid of the boat period. Work to 65. Pay for one year of college for grandkids if any at all.
Those LTC numbers are scary..
It's certainly doable to own a boat in retirement, but you need to be very realistic about the budget including inevitable big ticket items depending on the size and age of the boat. Not retired yet and I own an older cruising boat - I budget $1200 per month based on 20 years history and regression analysis of the cost of fuel, insurance, maintenance, and sufficient reserves for big ticket items.
All depends how expensive your lifestyle is. We don't need a long video to explain it.
I'm close to all of these numbers (in two years, when I'm 61, I should be at these numbers). At this point (five more years), I'm working to at least 65 and may go to 67... for similar reasons. Each additional year I work makes a dramatic difference. Paying into retirement and my mortgage at over $100k per year is hugely better than drawing down my nest egg by a similar amount-so each year is a $200k+ swing in net worth and investment.
$7000 per month for spending is way too high.
housing expenses seem high, my yearly budget, $4K for real estate taxes, $2k insurance and $6k for utilities, total of $12k a year.. no mortgage..
the legacy feels like something you’d aim for but not guarantee - with such variance of returns etc you could plan to leave on average 500k but with accepting risk it may get burned if things go bad, or could be a lot higher if things go well?
I WAY overestimated how much I would spend in retirement. I am spending less than half of what I planned for. A huge factor was having a paid off mortgage. We are generally living off social security, plus some other mineral interests. Five years into retirement, I have yet to take a penny from my IRA. It has increased by 35% since I retired. Still able to take nice vacations, and do whatever we want.
It’s pretty apparent they just wanted to keep spending. A bad plan. Common sense says that heading into retirement you should ideally be debt free and not have a lot of other financial burdens.
i think i know my financial choices.
what i need to know are where are my gaps, choices i am unaware of. but MORE importantly, how to WEIGH these choices. it is easy to get education on the plethora of strategies... i do not know how to weigh them against my financial reality and ESPECIALLY against an known future 30 years down the line.
I noticed when you input $1540 for life insurance you kept the 500k in legacy. Shouldn't that have been zeroed out?
Great question. Someone else pointed that out too. No, because the $500k is a goal to pay from the accounts. The LI dumps into the plan at death but the goal needs to be paid out to come to pass.
I think what is most telling about this comment section is that most people believe they should map their own values and what is important to them to dictate how all others should behave. We are all different, have different values, and are willing to sacrifice different things. Plus the calculus is very different for someone who loves their job versus someone who hates their job or someone who gets a huge amount of pleasure from an expense versus others who don't.
Why would you lock the College fund money into a 529? There is no guarantee any of them will be college material and now you limited the use of the money. Instead use the Roth IRA for this purpose. Then you can either use it for education or retirement.
I would send grandkids to work and pay me for my boat slip
They spend to much and don't live in the right area ill retire with 1.2 million and will have around 30k to blow each year so i think ill be fine and be able to do some stuff.
Thanks so much for the great video. It is really helpful to see the options and factors to consider. Per your discussion of breaking out medical expenses, vacations, etc., what is the typical way financial advisor fees are reflected within Right Capital? Are they built into the program or should you account for them in your budget or a line item. You got me curious as you discussed breaking apart the other expenses :). Thanks again for the really helpful videos. I've watched several of yours and I appreciate your thoughtfulness and the details. Really helpful!
Glad they are helpful. RC can reflect before or after fees, depends on how it is set up. We always reflect net of fees.
What about using house for long term care for second person?
Yes . I like that idea in many cases.
Of course they can retire. Just don't spend as much. It's all about expenses
Great detailed video! Hope to be in similar situation so really brought it home. Assuming rent is also the same as mortgage and not to be included in the $7k spending? We plan to sell our house, move to a LCOL location and rent and leverage equity to do some Roth conversions at 60. I am mostly scared of RMDs and the large tax bill looming! 😅
Glad it was helpful! Rent would need to be included, in this case, the $7k would be in addition to what they pay for rent… (they are paying mortgage- but just swap them out)
$2,000 a month for a boat slip? Rent a boat for the day instead.
I retired at 61 with $2.2M, and only one debt…....my mortgage. I drive a porsche 911 and a Tesla and I’ve already funded three college bills for my three sons. It’s 3 years later and I’ve not spent any of my original money and made $352K on the market. I’m planning to take my SS at 65 as there’s no way I’m waiting and have the feds keep my money any longer. My home is $1.5M, and owe $$400k in debt on my mortgage. I’m loving life. A boat..never again it’s a black hole that sucks money
Greatly appreciate the video! Can you please elaborate on what makes up the healthcare expenses beginning on year 2028? Although it looks high to my untrained eye, I am wondering if this is one expense category I cannot say I fully understand or have accounted for adequately in our numbers, and I dont want to find out too late that we should have projected more for it either.
Excellent analysis, personally I would forgo the 500K legacy and give money when the market is up to my kids, nothing if it's down.
That’s what I love about financial planning, everyone gets to plan and adjust for what they want to see happen in their lives.
If you can't retire with almost $2 million in savings (and probably a house that is paid for), then you have a spending problem.
DITCH THE BOAT
Not worth missing out on leaving millions as a legacy to your heirs.
I retired at 47 with less than 1M. I’m living a great life . First I moved to a low tax country, Uruguay. Paying private health insurance for 50usd monthly .I bought a huge house near the beach , on summer I rent ir , a few rooms as a hobby meeting people all around the world . Vacations 1or 2 a Year . 7 years of retirement I increase my capital by 30% . . If you want to retire young you can move to places like Argentina , second largest city you can rent a 2 bed apartment for 200usd , live very confortable for less than 1000usd a month . While you enjoying life you can use only a small part of your earnings while reinvest the rest for the time you want go back to your country .
I don't understand spending $7k/mo NOT including housing!
What kind of cable tv plan do they have? Is their power bill really that high? Is there a bitcoin farm in their basement? Are they eating out daily? Leasing 5 luxury vehicles? Oh well. Different strokes. 😂
Instead of leaving a 50,000 cash legacy to heirs, why not leave them the house? It'll be worth far more than 50,000 by the time they both pass on. They are foregoing early retirement to leave that legacy. How about YOU spend the money YOU earned/saved/grew and let your heirs worry about THEIR money?
Sell the boat and join a boat club !
So the solution is working 2 more years?
I don’t have any degrees, but I could have proposed that, too 😂
Love it! So true.
Big spenders with modest savings.
Get rid of the boat.
Let the parents save for their kid's education.
My retirement was just last month. Having pre-tax income of $5.7 million, I did follow my one-time advice from Lois Jean Frueh Since I have an inherited $700k that I have to spend down in seven years, I had to do it all at once. I'm currently 59 years old. I have $3.5 million in Roth since I have a pension. Stocks worth $4.5 million are taxed. I'm starting to give my kids gifts now, as you stated, to help with a house down the road.
I am no longer suffering with rmd. Children receive it free of tax. The only thing my wife has is $600,000 before taxes, which I may need to convert at some point. I'm attempting to avoid paying for Medicare, but it appears like I will have to for a time. I am unable to even deplete my pension each month. excluding the remainder of my investments.
Sounds like you did some serious tax planning!
Because you will NEVER be satisfied, ever.
I have double their retirement savings and would not be comfortable with their proposed spending. Halfway through this video I was thinking they have a choice, work a couple more years or sell the boat. 20 years of mortgage payments in retirement is an indication of poor planning too.
True .
Work till 90
if 2 million isn't enough, someone really loves the drugs.
Their retirement savings is way too low with both earning over $100K each. They’re not saving enough. They should double their paycheck deductions and retire at 65 years each. He retires first, then she retires at 65. Long term care is self funding. There’s no insurance that guarantees senior care at assisted living or skilled nursing facility. They should have $7 to $10K a month available for such a scenario in future dollars. Healthcare is Medicare at 65. That’s why she should work until 65 and offer her healthcare to her husband. Offering scholarships to grandchildren is unnecessary. Just offer a flat amount if they insist, but an open ended 2 year of expenses is a blackhole. This is not the best example since they are obviously the 1% couple who are completely clueless about finances.
First World American problems 😂 insane
After certain generational SS and Medicare reforms sometime within the next 10+ years…a video like this one day will be more like why can’t we retire at 67+ with $3+ million. 😢
Fixed costs, simple. I retired 10 years early to SE Asia. Smarter not Harder
We live in the land of plenty and for most it is NEVER enough. 🤦♂️
If someone makes $1M and spends $1M+$1 they are poor.
This is what I call “poor millionaires” 😂😂😂😂
With all that said it is their freedom to live what ever way they want.🤷🏻♂️
Of course you can retire with that much money. Don’t live in Bel Air or Manhattan.