How Much You Should Save For Retirement

Understanding how much money you need to retire is important because it helps you plan and prepare for your future financial needs. Retirement can be a long and expensive period of your life, and you'll need to have enough savings and income to cover your living expenses, healthcare costs, and other expenses. Knowing this ahead of time can allow you to create a comprehensive retirement plan that takes into account your income sources, savings, and lifestyle goals. This can help you avoid running out of money in retirement and allow you to enjoy a comfortable and secure retirement.
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When it comes to expenses in retirement, it's important to approach your budgeting with a long-term perspective. While retirement may initially be a period of reduced expenses due to a change in lifestyle, such as no longer having to commute or pay for work-related expenses, it's important to plan for potential future expenses that may arise. To start, consider creating a comprehensive retirement budget that takes into account all of your expected expenses, including housing, healthcare, food, transportation, travel, entertainment, and any other expenses that you may have.
When it comes to managing your retirement expenses, it can be helpful to prioritize your spending and make adjustments as needed. For example, you may want to focus on spending money on experiences that are important to you, while cutting back on non-essential expenses.
Overall, the key to managing expenses in retirement is to be proactive and plan ahead. By taking a long-term perspective and regularly reviewing your budget and spending habits, you can help ensure that you have enough money to enjoy a comfortable retirement.
When it comes to income in retirement, it's important to have a comprehensive plan that takes into account all of your potential income sources. Here are some key considerations to keep in mind:
Social Security: These benefits are a key source of income for many retirees, so it's important to understand how they work and how much you can expect to receive. You can access your estimated Social Security benefits by creating an account on the Social Security Administration website.
Retirement accounts: If you have a 401(k), IRA, or other retirement accounts, you will need to determine how to withdraw money from them in retirement. This will depend on a variety of factors, such as your age, tax bracket, and financial goals.
Other income sources: You may have other sources of income in retirement, such as rental income, part-time work, or dividends from investments. Make sure to include these sources in your overall retirement income plan.
It's also important to consider the impact of taxes on your retirement income. Depending on your income sources and tax bracket, you may owe taxes on Social Security benefits, retirement account withdrawals, and other income sources. Be sure to consult with a tax professional to help you understand your tax obligations in retirement.
Overall, the key to managing income in retirement is to have a comprehensive plan that takes into account all of your income sources and is flexible enough to adjust to changes in your financial situation.
The safe withdrawal rate is the amount of money that you can withdraw from your retirement savings each year without running out of money during your lifetime. While there is no one-size-fits-all safe withdrawal rate, there are some general guidelines you can follow to help you determine a safe rate for your retirement. Keep in mind that a safe withdrawal rate is not a guarantee, and unexpected expenses, changes in market conditions, and other factors can impact your retirement savings.
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Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money.

[@JarradMorrow]

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[@TheFirstRealChewy]

I got a 2% raise. Due to inflation I'm now making less money this year than last year.

[@matthewmaurin9054]

To all the people that are gonna comment social security won’t be here in 30 years, the social security trust fund goes empty in 2033 and when that happens there will still be enough income coming in to pay 76% of the benefits. Do you honestly think the government is gonna let the largest voting block lose 24% of their paycheck?

[@JarradMorrow]

Completely agree. All they care about is staying in office so they're not going to mess with one of the most popular social programs.

[@aaront936]

Social security is a ponzi scheme that needs to end.

[@OShackHennessy]

You are correct, I just read 2035 and 80%. Not exactly that big of a leap to fix it considering some of the garbage we spend money on.

[@TrendyStone]

There isn’t really a trust fund. That’s a myth. It all goes into the same pot. The problem could easily be solved by raising the retirement age.

[@ariefraiser140]

​@@TrendyStoneStrange. I just got through reading about the financial health of the social security trust fund on the social security administration site ssa.gov. Who told you there's no such thing as a social security trust fund?

[@stewdogg42]

Jarrad! I love your videos! Please keep them coming.

[@JarradMorrow]

Thank you! Will do!

[@gorshenbag]

Great video as always Jarrad!

[@JarradMorrow]

Glad you enjoyed it! Thank you for the feedback 👍🏻

[@OnCashFlow]

Absolutely agree with updating your plan as time goes along. Probably should look at it annually and make any adjustments as needed. Even after you retire, you can re-run the numbers each year and "re-retire" every year with slightly updated numbers if you need to because not every year is going to be the same income and or spending.

[@nala3038]

My Greatest Generation father told me a million times growing up, "Son, it's not how much you make, it's how much you keep'.

[@RobT192]

My father always told us something similar, "Son it's not what you make but how much you save". He always encouraged us to save money and I am grateful that my father taught me so much, he passed away this year at 71, a week after my 31st birthday

[@nala3038]

@@RobT192 I’m so sorry for your loss!

[@WestExplainsBest]

You may not have enough money, but according to your thumbnail, you are going to age very well!

[@JarradMorrow]

When my thumbnail guy sent me this I laughed and was a little disturbed 😂

[@WestExplainsBest]

@@JarradMorrow I'd call it a win - he could have done far worse.

[@ivanvarykino8202]

The scary part is, my monthly budget now is 4k at 59. But that is with zero debt. My 500k house is paid off. 2 cars paid with cash. 2 college funds populated for daughters. Yet, to retire and have basic annual budget nearly 50k with no fat to trim makes me fear for young people today. I have the future covered. But will the average person able to retire and do anything extra in retirement when the first 50k just covers the basics to live? Start investing early through your work plans using simple index funds and Roth IRA's outside of work. You won't regret it.

[@eddiemalvin]

Great video! Keep them coming. The fact that Fidelity is estimating expected retirement expenses based on *working income levels* shows the poor quality of many retirement planning resources especially for high income families. Someone who is currently saving/investing 50% of their working income doesnt need 55-80% of that income in retirement. Not even close.

[@DarkLordDeimos]

The vast majority of people are not high income and able to save/invest 50% of their income. So the general guidance makes sense for the majority of people.

[@Chris-nb1rt]

VIDEO IDEA: Since you use M1 for your investing accounts, would you take in consideration of creating a vid on covering M1 securities lending? Lots of negative commentary on social media being opt in automatically and potentially not being covered by SIPC.

[@jasonjstdr]

My best friend wants $100k a year in retirement. He plans to get $48k from social security and $52k from his $1.3 million 401k. I wonder how much taxes will set him back.

[@freedomring3022]

great video ... most people (myself included) really don't know what they want to do when they retire. They also don't take into account they simply won't be physically able to do a lot of things they are hoping to do. Let's face it, we slow down when we get older. I love to ski, but I know I won't be skiing as much at 60, 65 or 70 as I am right now. I also know I won't need as big of a house when I am that age. For one, less people living in it and 2, I want less property to maintain. This is my own personal assessment and I think everyone's retirement number is going to be different. It is safe to say though, that having more of a nest egg is always a better bet :)

[@ivanvarykino8202]

Totally agree. Which is why, regarding your comment about slowing down and losing physical abilities, it's best to retire as soon as we are able to safely do so.

[@AnthonyErnst-]

I currently invested in stocks with the help of Bit-Astro. They have been trading for me & has helped me grow my 6 figure portfolio to over 200% up. I can proudly say that I’ve never lost any trade since I started with them. I guess I’m ready to retire early lol

[@Username_CC_]

my dad still runs 10ks at 72

[@kevinfestner6126]

Im figuring inflation at 5.5 pct.

[@kutayecevit4125]

Dear Jarred Thanks for the video but even though I subscribe web site did not show anything. In short I cant reach excel (spending tracker)

[@educatedwanderer9293]

I never thought I was aiming for FI when I paid my own way through college and started working as a critical care nurse at age 23... I started in my late 20's working one extra day every week to pay off debt. Once I was debt free using the baby steps I kept working the extra day to try and max out my 401k. At the age of 47 I had a net worth of about $400k or 500k. My father became ill and I helped him until he passed away three years later. I did not expect it but he left me all his portfolio of $700k. I invested everything I had inherited and I continued to work and save 30 to 40% of my pay. I put 40k over time into 529 funds for both my sons and paid off our house over five years. About eight years later at the age of 54 my net worth is 2.3M. I plan to continue to work full time plus in critical care nursing until my two son's finish college at age 58 to 60 and then retire with a portfolio of 3M or more. My family of four's current annual net living expense is 78k. The growth in the portfolio is supposed to keep up with inflation and improve our financial health so we can give to charity over time barring any downside surprises.

[@amerjaboob3342]

Hello Jarrad, thanks for your videos, if someone is investing in VOO, VUG, VXUS and SCHD, are those good ones to keep investing on them or you see a major overlap that need to be avoided.

[@alex182618]

Nothing wrong in overlap. VOO and SCHD have the same stocks. So what? Having them both makes portfolio lean toward value investing. Which makes the portfolio move up and down a little differently than the total market. The total return will be about the same as total market in a long run.

[@OShackHennessy]

Using income as a gauge to retirement spending is just lazy. Why do these companies not encourage people to track their expenses?

[@alex182618]

All retired people I know spend just like everyone else. They pay less for having a roof over their head because they live in project apartments, have section 8, or rent freeze program. Otherwise their expenses are the same or higher.

[@TheNoobTker]

I think you shouldve structured this from the perspective of someone considering whether or not they have the ability to retire or not (ie work in present value and assume real return rates). You jump around with future value and present value randomly, and your example at the end of the video needing 580k in todays dollars doesnt appear to account for growth at all? Over 30 years you'd see more than a 1.5x return. SS is COLA adjusted, important to mention since you are working in future dollars.

[@ingababy5196]

Spending in retirement for me will be less because children will be grown and gone and home will be payed off.

[@RandomJane104]

How did you know I'm in Charlotte, NC? 😂

[@JarradMorrow]

😂 because I know everything! I actually visit there a few times a year so it was the first thing that came to mind. Love that area, but I could do without all the traffic.

[@RandomJane104]

@@JarradMorrow Ugh true. WFH is the best. My office is Uptown, 8 miles from my house. 30 - 45 minute drive in and 45 - 60 minutes home. The light rail doesn't get close enough or I would take that instead. At least it isn't Atlanta bad.

[@vansicklejerry]

If your in your 20s and 30s and have been investing all along, you can retire sooner. I retired at 37 years old.

[@fluffycactus17]

I just turned 18 and wanted to know your thoughts on my current Roth portfolio of 80% fxaix and 20% ftihx? Most videos I have watched suggest vanguard funds but what do you think about Fidelity’s?

[@JarradMorrow]

Those funds and the allocations are perfect. I wouldn't change anything about that for the next 50 years. Ignore everything else and focus on making more money so you can shove it into those investments. Investing is so simple but everyone tries to complicate it by adding more funds than they need.

[@fluffycactus17]

@@JarradMorrow Thank you for your input I appreciate it!

[@Tornado683]

$6k in expenses per month is insane 💀

[@MrSubie10]

The data that was presented about spending in later years in life is not necessarily painting the entire picture. I wonder how many of those people spend less because they didn't save early and are forced to spend less thus skewing the results. I want 90% of my income and if I too much, then that's a great problem to have.