MythBuster: Do You REALLY Need $1 Million to Retire?

This video explores the question: do you need $1 million to retire? For many people the answer is no. For some, 1 million dollars in retirement investments is not enough. This video will break down how to think about retirement assets, retirement cash-flow and most importantly it will debunk the mystery of the $1 million dollar retirement savings number.
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Disclaimer: this video is for educational and entertainment purposes only and is not meant to be a substitute for legal, accounting, tax, or professional advice. If you have any specific questions about any legal, accounting, tax or other professional service matter you should consult the appropriate professional services provider.

[@keithss67]

No debt and a cash cushion for emergencies is hugely important. I like the way this guy addresses things. He is very straightforward, which makes for a nice change

[@davidpowell3347]

I think the "one million" means one million after debt is accounted for (subtracted from assets owned) also remember that if part of that million is in "traditional" IRAs and 401 type plans then "Uncle Sam" has his hand in that tax bomb (although if you don't have much other income except for what that one million throws off you might be in a low Federal tax bracket)

[@Diomedes01]

I am glad you brought up the 'cash cushion' in your post. Most people don't realize how important that actually is and how it can increase the efficacy of retirement concepts like the 4% rule. I would recommend that people working towards retirement and are leveraging things like the 4% rule add onto their retirement savings a cash buffer of between 12-18 months. That may seem like a lot, but it is based on the fact that the average recession lasts 1.5 years. So in cases where you are drawing down from retirement savings during good years where the stock market is rising, you can leave the cash cushion as is. But in bad years, especially during recessions when the stock market drops, one can utilize the cash cushion as a buffer and avoid drawing down from retirement savings in those circumstances. As the market recovers, you can start drawing out again from retirement savings accounts and use any excesses to refill the cash cushion as needed.

[@genehart261]

@@davidpowell3347 If you have your expenses under control you can live very well AND beat the tax man.

[@vuho2075]

What anybody "needs" is irrelevant. Question is what's the best you can do. You tailor your retirement based on what you manage to accumulate. Planned to live in NY? Might have to be Alabama. Think about cruising around the world? Maybe 1 week in Orlando instead. It's always about what you can do, folks..

[@audiophileman7047]

The first thing to know and appreciate is that you don't need a lot to be happy. All it takes is a change in expectations. You are so right, Geoff. Some of the best things in life are free. The best thing to do is focus on what you need to live and staying active.

[@nakho3550]

Is happiness not depended on hormone production? A healthy gut produces 80% of serotonin. You need a healthy thyroid and healthy liver for the happy-hormone production.

[@audiophileman7047]

@@nakho3550 Possession of good health when you are old is a blessing.

[@markrherman]

A change in expectations is being a quitter. It's the same thing Jimmy Carter tried to sell.

[@audiophileman7047]

@@markrherman Oh, one of those guys who thinks he can take it with him.

[@GrnXnham]

audiophile, exactly. The older I get, the more I realize that having good people around me makes me happier than having more $$$

[@dee_ewell_pierce]

I needed to see this video today. I feel so much better knowing that we have always lived within our means and are debt free.

[@dzl8596]

I’m spending my children’s inheritance. It’s a simpler plan.

[@ChaosRules57]

You know what dying penniless is? Good planning.

[@dzl8596]

@@ChaosRules57 No. Why don’t you explain it.

[@jmask30]

@@ChaosRules57 make sure the last check you ever write bounces 🙂

[@AlfaKenyBody]

Thank you for sharing such great content. Very encouraging and it is coming on the right time. I am 71 working weeks away to retire with 54 years and before, I had a $5M number on my head. But little by little and thanks to great material such as this, I am changing my mind. God bless you.

[@harveyh3696]

I'm 63, still working, and paying attention to your posts. Thanks for the information

[@jeanettelee2110]

Thank you Geoff! I left the workforce back in 2018, my husband retired a couple years prior. We've always maintained modest standards of living and happily lived below our means hence allowing us to retire without a mortgage, car notes or loans! This presentation is right ✅ on time and so very accurate! So thankful for you and the way you are sharing your insights and very valuable knowledge!

[@HolySchmidt]

Thanks Jeanette!

[@blakewilliams3702]

Geoff, as always, great content presented in a non-judgmental way. You’re helping so many people with “awareness”, as many don’t know the right questions to ask. Thank you. And thanks for catching that spelling error….that was driving my OCD side crazy!

[@andielliott2306]

Truth

[@szulewsk]

Dude ! I liked how you added the second "p" to happiness at 5:40 :-)

[@dcool2818]

It’s a small point in the subject he’s covering, but I’ve found the opposite to be true w/ regards to travel. Chicago, for example, is a very expensive city to visit. Cheap plane ticket, expensive hotel, food and activities. My theory is if you’re willing to eat the plane ticket, you can usually spend a lot less once you get there, in a lot of amazing places. For instance, a 400 dollar a night hotel room in Chicago would get you a three bedroom beachfront house w/ a pool in a lot of Central American countries. I’ve found that you get a lot more for your dollar, the further you get from US tourist hotspots.

[@stephenwalters2605]

Great stuff. I watch several youtube videos on how to trade in the stock market but haven't made any headstart because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands.

[@sophiamiller2682]

Have you considered consulting an investment advisor or using a portfolio manager?

[@stephenwalters2605]

hi, no I haven't do you know any or can you point me in the right direction?

[@charlottebrown9336]

Kathy gennelle britton

[@vivianbrown7264]

Intrigued to know what approach kathy applies, as I’ve come across her appraisals severally on youtube.searched, found her on the web and Left a message, I hope she can help me

[@wildflowerwind6941]

Very sneaky how you do that. Financial Phisihing.

[@denniskirschbaum9109]

Hey Geoff, great video as always. Just an important point that should be clarified. The 4% percent rule does NOT assume you are going to get a 4% return on your investments. Rather the 4% rule says that over a 30 year retirement you can safely withdraw 4% per year of the nest egg without risking running out of money. In fact, a recent Morningstar report suggested lowering that to 3.3 percent because of the historically low rates on fixed income investments. In any case, you are right to suggest that this can be adjusted during retirement as needed. As always your video is thought provoking. Thanks!

[@teekay_1]

The flip side is if you put your nest egg in the market you can generally take out 4% a year with little risk. You'll have years you lose, years you win. The key is to limit your withdrawals in down years. And the way you do that is to keep a cushion of $20-30K in cash; then you can weather these downturns without touching your principle. The market always recovers in a year, at worst, two.

[@jeffreyrivera8158]

@@teekay_1 Great advice, I will follow the 30K cash rule.

[@johnc2438]

@@teekay_1 Yes... great advice. And a "two-bucket" system works too, where you have two or three years of cash in a savings account (online savings account, for example) where you can draw money for expenses, while keeping the other, larger amount, in your investments (index or ETF funds, for example). If the market goes down, draw only from your cash bucket. When the market is up, draw some out to top off your cash bucket). Rinse, repeat. Of course, you need to set up these buckets before you retire.

[@teekay_1]

@@johnc2438 Yes exactly. I 'm assuming most people on here don't have the $150K to do what you suggest, so I tried to make it reasonable for this audience. I had my epiphany during COVID in 2020 when the market dropped 30% in a month and I was thinking that "how can I retire with that kind of volatility". And as I watched the market come back and give a positive return for the year it occurred to me you have to expect the market will have bad years. If you're planning on the market losing, you're being serious about retirement. So the simplest mechanism is to buffer your retirement with a cash fund in a simple bank account.

[@hal8683]

This is great advice! Save what you can but know what you need in retirement. Grandkids keep you near, Parents and pets keep you near. Downsize and hobby is a simple answer! Learning, helping, hobbies are great fun! So many things online now. I am 70 and retirement is far different than I planned. Living far lower scale but happier than ever. Don't wait to long to retire or at least slowdown. Your hobby or day trading may make you more than your J. O>B! At 50 I had several friends and family members pass on from different things. After 60 you are on the last of your life! Use it wisely! Great time and it goes fast!!

[@kathyokinaga9888]

This is my favorite retirement planning video so far, from any of the KZbinrs I've been following in the past few weeks. It's to the point, yet still entertaining. Thank you for guiding us and making our retirement plans realistic instead of fearistic. I just made that word up, feel free to use it in your videos :).

[@HolySchmidt]

Love the word! Look for it in an upcoming video. Thanks for the comment.

[@tomm8025]

Learn how to travel and it doesn't cost nearly what people imagine. I went from the U.S, to Australia & New Zealand for 3 months, did a ton of land tours, rented vehicles often, did activities like scuba diving, and the entire 3 months only cost me $6K out of pocket. Yes, I used air miles to get there and back but purchased several add-on flights. One way I save is by not spending huge sums on fancy resorts or hotels...IMO, why? I have no intention of spending a lot of time in a hotel room. I see people go to another country, pay big $$ for a resort package and the never even see the place they went....they just hang around the resort. Why fly long distance for that? Figure out what's important to you when you travel, then save a lot by doing those things and not spending money on the stuff you don't care about. Tons of people travel cheap and they usually have the best experiences.

[@samsmullen991]

Totally agreed. I traveled extensively before the pandemic on shoestring budget. I can afford to stay in the fancy hotels but I don't. I stay mostly in hostels or rent a room from locals if I'm staying a month or more in same area. I do fly in business class if flight is longer than 8 hours since I like to get comfortable sleep in the flight. But other flights are economy flights. Flights to Asia and Australia are long flights from US (JFK) and it's worth the 5 times price of economy seat to be able to lie down and sleep. I used to book a economy flight and get to airport about 3 hours early to upgrade to business class seat for additional $150 but that's hit and miss. Lots of times business class seats were available and offer an upgrade but when they don't have to seats available, it was miserable experience in the coach seat for 18 to 22 hours of flight.

[@tomm8025]

@@samsmullen991 - Yes. See you figured out what's important to you. You're willing to pay more for better flight experience because you said you're miserable if you don't. Yet, save on accommodations. I myself would absolutely pay the $150 to bump up to biz class, but will not pay 5x the price. I've yet to find coach that bad to make it worth that much more money. Lot of American's don't realize how great some countries hostel systems are (because America doesn't have a very good one). For instance, Australia and New Zealand have great hostels. Through the entire country of each. Not only did I get a bed to rest and place to shower, but sometimes had a good experiences and met interesting people just because we were at the same hostel. Especially good when you're traveling alone (which I highly recommend Americans do if having trouble finding co-travelers, because finding someone with the time, money and willingness to travel extensively will be hard, so better to do it yourself than not). Can't wait for everything to open back up. Have trips to Asia, Caribbean and Mediterranean on the list. No less than 2 to 6 month each. I realized decades ago that I am no where near as materialistic as I would have thought I'd be. I've bought plenty "things" I regretted buying. Never regretted an single dime I spent traveling....even if the experience wasn't that great. But I find money spent on experiences is far more valuable and memorable.

[@samsmullen991]

@@tomm8025 I value comfortable sleep while traveling. I normally get a single room at the hostels if they have it but dorm bed is as or better than business class seat/bed. Since I'm a solo traveler, I do meet many interest people of all ages and all over the world. And I get some helpful tips on where to visit. Some hostels offer free meals where on the guests get together for a meal and have a great time. I met singers, dancers, retirees, college students, honeymooners, unemployed factory workers wanted to take a break.... At my age, I don't want anything like sports car or fancy threads. All I want is to continue travel and hike, bike swim and other activities that require physical fitness while I still have the health. I'm only gone three months at a time since I have to come back home to refill my 90 days supply of maintenance medications. I travel to warm places during winters and usually spend late spring and fall in NYC. I spend half of time staying at home and other half traveling to various countries. I used worry how I'm going to fill all the pages on the passport and now (pre-pandemic) I look ahead and get extend pages on my passport. I have visited 6 of 7 continent and was planning on having Antarctica tour to complete all but due to pandemic, it got push back. I want to visit all the countries in Asia, Africa, and South America. I have visited most European countries except eastern Europe. I also want to visit all 50 states and I have only 20 remaining. That want I want to drive and camp or stay in the motels or hotels. America sucks when it comes to good hostels even in the big cities. YMCA is okay but it's not a hostel and I rather stay in the hotel than YMCA.

[@tomm8025]

@@samsmullen991 - I traveled USA extensively while working as well as leisure in my 20s & 30s. Only 8 states I have not been are Alaska, Wyoming, Montana, both the Dakota's, New Hampshire, Vermont and Maine. Those states are lower on my list as I'd rather focus on International destinations. Interestingly I have not been to Europe and my Mediterranean trip will include all European countries around as well as a couple non-European countries. Other European countries will be a separate trip, but the northern parts are lower on my list a well. Been to Asian countries (but will do more) as well as central and South America. When doing the USA, road trips are best. Since I have gotten older I value a good bed more than before. In 2017, a buddy flew out to the Northeast and we drove from NY to Florida, did a big "U" through the state and then came across the country. About 6K miles total driven. Having a travel partner made getting better beds more affordable. Anyway, we took our time and it was a one month trip where we stopped various places for various amount of time. We played poker most nights (he lives for poker, I think its an interesting game but don't NEED to play it) as it was technically a "poker road trip". Same buddy wants to do Asia with me, but looks like he wants to do less places for shorter period. I told him, I'm not flying that far for a short trip, I'm going for a MINIMUM of three months. So we'll see, he'll likely join me for some of it and I'll continue solo. When I reach early retirement age (about a decade away) I have my own draw down strategy which I call a "front loaded retirement plan" where I will continue to travel and do activities and spend down much more of my retirement savings in the earlier years, and then as I physically slow down I'll ease into my "sit around a stream entertainment" phase, which will cost very little. The hell with these people who won't spend there retirement money because they fear that they'll run out of money and live way longer than they actually will. Fear will suck the life from any retirement they could have had and they'll die and leave way too much for someone else....who won't respect the money and most likely blow it.

[@targadave]

Geoff, always a well balanced and thoughtful presentation. One very new unknown that all of us will potentially face is high sustained inflation in a low investment return environment. I recall several financial guru’s commenting on Monte Carlo simulations predicting how long your savings would last, and vaguely remember some of the poorest results were obtained when retiring into extended periods of high inflation as opposed to retiring into typical equity market setbacks in low inflation time periods, as most might expect. Might be a timely topic to key in on for future videos……

[@billc4993]

Another great video. Suggestion: a video on how to find a fee only financial advisor you can trust.

[@jlb9074]

You are by far the most reasonable and rational financial advisor I watch. Well done. As a CPA and a long time financial professional, I’m astonished at how much bad/incomplete information is out there.

[@johngill2853]

Really? Did you miss the party what he said about the 4% rule. The 4% rules from the Trinity study, not that you should get a 4% return on your investments

[@jlb9074]

@@johngill2853 Yes, I did hear that part.

[@johngill2853]

@@jlb9074 and this wasn't the bad and incompetent information that is out there?

[@jlb9074]

@@johngill2853 Believe what you want to believe friend.

[@johngill2853]

@@jlb9074 yes no hard feelings,but this video is exactly what you described the other videos.

[@goththicus]

What folks don’t realize it’s not how much you make but how much you spend. Once retired even though you may be debt free you have expenses that will eat away from your retirement income: property taxes, property insurance, car insurance, health insurance, life insurance and state income and sales tax and federal taxes to name a few. And let’s hope you don’t require nursing or home care services - this will definitely eat away from your income and savings.

[@kennethwers]

Low taxes and no payroll deductions.

[@thelakeman5207]

If you go to a nursing home, all your financial savings will disappear.

[@Mexicobeanpole]

Well, neither my parents or my in Laws had a million dollars when they retired. They had paid off house, zero debt, social security and emergency funds. The highest was 100k. They lived simply, but comfortably. Note: everyone downsized and weren’t “wine, dine, and world traveler” type people. All NOT college educated and never had high paying jobs.

[@johnhellstern6588]

I can't believe his following is so low when he gives the best information and makes us understand without making us feel stupid. Thanks for looking out for us!

[@stuartclubb4302]

$1M + Social Security for two working people who had typical incomes throughout their lives will be a lot more comfortable than $0 + the same Social Security. With Average Social Security check being $1500 or so, a couple might bring in $36K together. That's a bit of a miserable existence even with a paid-for home and no debt. $1M can put $40K+ a year on that for a much more comfortable existence. Because let's be honest, $1M is not what it used to be, and isn't that hard to amass. $330 a month from age 25 to age 65 at an 8% CAGR will do it. Feel free to tell everyone why you can't, but still have a $800/month truck payment....

[@dubiousinvirginia1123]

Gee, when I first started working $330 would be one of my paychecks each month for the first 3-4 years. My how times change. Additionally, $36,000 is not even near a miserable existence. I do not know where you live to think that. I have investments and could live on a great deal more than I do. ( not a million though) I live on $34,000 a year with base expenses less than $1000 per month. My cars are 17 and 22 years respectively. I can afford a new one, but why bother. It's a car. I do not change cell phones every two years. With the huge amount of equity I have in my desirably placed home, I could downsize a second time and run to the bank like a bandit. I have zero debt and do not pay for anything extra that does not add enjoyment and years to my life. Already been to Europe twice. Hitting the rest of the country in the next decade before that mid-seventies slow down, which I know will happen if I want it or not. Individual antidotes really make no concrete point about this topic, including mine, except to confirm what Mr. Schmidt is suggesting, it all depends on your individual circumstances. I would hate for someone to forgo retirement because they were scared to death they could not make it to some magic savings number. If you are sick enough to run through your savings, you are probably sick enough to not travel or do much of anything else. I suspect it balances out. Rational reality much more satisfying than running on fear. PS not planning to leave my heir anything but perhaps a domicile.

[@mikegruber172]

and people forget, when you retire you are NO longer Putting Money away for retirement. with two 401ks and two IRAs that is $64,000 not required as income !

[@sheneedsme]

@@dubiousinvirginia1123 I can’t imagine trying to make it on $36k a year. That has to be at or near the poverty line. I guess if you are ok with food stamps, driving an old piece of crap car and never leaving your house to ever go on vacation or out to eat with friends. You better hope you never get sick or get old. It costs way more than that for my 92 year old mother in laws assisted living facility. My house and cars are paid for and I have no other debt other than property taxes and insurance and I could never survive on that.

[@dubiousinvirginia1123]

@@sheneedsme You have given me a laugh for the day and bless your heart. Nothing you assume is true here. Don't know where you live, being single, glad I don't.

[@cnwil4594]

Everyone's situation is different.

[@MaryOlson7]

I watch several KZbin videos on how to trade in the stock market but haven't made any head start because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands

[@MaryOlson7]

@Maximilian-iLudwig44 What is the name of your broker and how do i connect with him or her ?

[@Amelia-Elizabeth]

@Maximilian-iLudwig44 Bridget Mary Turow is quite popular on Bloomberg I doubt if there is anyone who is serious about stock trading that doesn't know her. She has helped me quite a few times in growing my portfolio and it was blissful without any setbacks. she is a tough person in an industry that demands clairvoyance

[@esthernoel3793]

Thank you Geoff! Your videos are practical and reassuring.

[@s1n4m1n]

Yeah, I was looking at my 401k this week and the plan administrator website retirement planner defaults to "70% of current income in retirement" but then I started adding up my estimated retirement expenses and it was no where near that. Subscribing now to your channel.

[@ageisonlyanumber8334]

My plan is to have 100% of what currently goes into my checking account as income in retirement. I will have 3 years worth of expenses in cash positions and a paid off house which I do not have now. Having no house payment with my current checking account income I will have money for fun including travel if I set aside money for it for short periods.

[@dantheman6607]

I’m 52 and have saved over 1M. The key is good education, good job, keep that job, and contribute every paycheck to your 401K and IRA. It takes time x money 💰

[@mannyechaluce3814]

I had 1 mil in my 401k at one point and it was cut in 1/2 during the financial downturn , from 1 million to 500 grand, it did come back stronger and I have 1.5 mill now, it is an investment after all, I am just hoping when it is time for me to cash out it still has good value, and not turn to 5 bucks, which could happen, it even has a potential to completely get wiped out to Zero dollars .

[@jaygrenham]

@@mannyechaluce3814 there is no one holding a gun to your head telling you to keep all that $ exposed!!! Take a chunk off the table …in fact if you’re near retirement take it all off Do not let the markets take your next egg!!

[@Komainu959]

This is a great video. Unlike those Yahoo "finance" articles where they talk about how long X Million will last you in retirement in all Fifty States. Their exercise looks like this- if your state has a median cost of 50K a year then your 1 million will last you 20 years...In other words they only take the cost of living annually and divide it by your nest egg. That is from a "finance" site. Just terrible.

[@wildflowerwind6941]

This explained my situation perfectly. Thank you.

[@watthairston1483]

Excellent and VERY informative videos, straight forward right to the point. We like the whiteboard approach too for facts and figures. Your channel has been an asset to us in our retirement years. Many Thanks, WH

[@ttenner9179]

The 4 percent rule does NOT assume that you get a 4 percent return on your investment. It does NOT imply that you leave to others the principal. It simply states that based on history of the market, you have a 95 percent chance that your portfolio will last for 30 years and that you will not run out of money before the 30 years are up. No assumption that the principal will be the same at the end. Sorry Adviser, but you are wrong here.

[@2legit2Kwit]

My mom didn’t save a dime. She did have a nice single wide mobile home in a nice park. Her overhead was low and of course social security wasn’t enough but she made do.

[@skibum6422]

That is sad. Hopefully people are learning that SS is not enough to get by on in retirement.

[@tinalippincott9823]

Might be helpful with recent announcement of Part B Medicare premiums going up from $148.50 to $170.10 in 2022. Also, increase in deductibles. Add to this, record high inflation. And who is most impacted? Those on fixed incomes. Just when I start feeling hopeful, the news just gets more depressing. I have no answers.

[@nakho3550]

Cut back on food. Eat one meal a day.

[@vincentortega4284]

God does, just humbly submit, and ask God.

[@sct4040]

Cut back on everything, but not healthy food. Go low carb, high protein and vegetables. Exercise. TKe care of your teeth, oral health can impact on your overall health.

[@nakho3550]

@@sct4040 protein is expensive. It should be moderate protein, not high.

[@generatorjohn4537]

Medical is probably the biggest expense you will face into retirement. If you are Medicare eligible and worried about paying for it there is Medicare Advantage plans that may help one keep costs under control. I read an article yesterday that said this 14.5% increase in Part B Medicare premium is to help fund this new Alzheimer drug program.

[@jc10907Sealy]

I’m 62 still working. I’ve used my retirement funds to cover a catastrophic loss of home to housefire. I rebuilt with insurance and paid off the overage and paid off ALL debt. I’ll have good SS income and marginal investment income and use a reverse mortgage. I’ll be fine with only $100,000 in investments because with all those other sources and NO DEBT NO MORTGAGE on new home and paid for car mean I’ll be comfortable. No debt is key. Gives options to cover the basic living expenses and everything else is fun money. Thanks for being realistic.

[@poodlegirl55]

Traveling can get very expensive in retirement, we are lucky to get two free ones a year. I renamed my daughters Summer and Winter as we visit Summer on 65 acres in the North woods with a lake and her sister Winter lives in South Florida near the ocean.

[@davidpowell3347]

Without Social Security,Pension,401/457 plan balances,etc: Probably YES unless living an alternative life style,or if already a homeowner with a paid up house that isn't counted towards the "one million"

[@Bob-yh7ir]

We came up with a number that is a little over 1 million but realize we probably will not need that in actuality. Retiring early, somewhere around 57 years old. When we run our projected budget in retirement based what our current expenses for household is plus covering our own insurance and the travel we plan in early retirement plus inflation, we need 50K a year ( 15 to 20K is earmarked for extensive travel ). We also only need our investments to do the heavy lifting for 8 to 10 years. When I turn on my SS perhaps a little early, it will pay for all our normal household expenses. When my wife activates her portion, well, we would not have to pull from retirement investments unless for some expensive cost or repair or travel trip. So we are really getting excited about it and looking forward to a new chapter in our lives. I always say, if a series of bad things happens or we need to generate a little income, we can always get some part time gig or contract to do so. You can always make more money, can't make more time.

[@leighnash6140]

Your videos are a wonderful source of information 👏

[@debbieivanov9037]

Thank you! I am FAR from 1 million, but hopefully planning accordingly.

[@Margerat-x]

I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.

[@stevenm8503]

I always thought the 4% rule was more than just a conservative expected earnings, which is what is implied in this video. If you want a lump sum to give you annual income that keeps up with normal inflation and pays income taxes, you can’t use all the earnings every year as income. I found with some conservative rate of return assumptions, withdrawing 4% of a lump sum each year allows some growth in principal to keep up with inflation.

[@johngill2853]

Yes do not listen to the guy in a video about the 4% rule. He doesn't know what he's talking about. Simply look up the tritney study

[@niceguydmm]

I didn't save lots of money but I did make good money and paid my home off at 55. I just put a new roof on, did some remodeling. I am retiring at 62 with a 2300 SS check and around 200K. I own my cars, my boat and the land bedside me. ZERO dept. My taxes are 900 a year on a 220K home. My wife's SS check will be 1200. I don't believe I need a million dollars. I have a shop behind my house that I can weld and make a few extra bucks. The ACA insurance is actually pretty good. We don't smoke or drink. Don't take expensive trips and just watch our horses and go fishing. You got to get out of dept before you retire!!! If not and you want to travel and spend spend like you always did then yeah you need a million dollars.

[@HolySchmidt]

Thanks for the comment. You make some good points

[@mrallan8063]

Very good video! In retirement, you can control or change your spending each month and year. Some months you may need $5,000 or other months it may be $2,500. Also, the 4% rule is an extreme conservative benchmark... the model says you won't run out of money 99% of the time over a 30yr span assuming a consistent withdrawal rate.

[@johngill2853]

You get with the 4% rule is. This guy in the video has no idea what it is. The one point you're missing it's not a consistent 4 percent it is 4% plus inflation every year

[@rds990]

I'm retired and have not got a million. I have a mortgage too. Now the house is worth 400k more than the note owed, but still ....that's not liquid and probably never will be. I have payments nonetheless. Don't let people tell you how much you need. Not everyone tries to fit into that "Oh I have to travel" deal. I saw much of the world for free ....on business travel. No need anymore. Everyone's lifestyle is different. Everyone's spending is different. There is no "rule". Just use common sense.

[@JBoy340a]

I don't know about people selling their big home and moving away in retirement. For many the home is paid for by retirement. The taxes are a predictable amount. And you are familiar with the area. You know the doctor you have had for years. You can find things in your grocery store with your eyes shut, you have your favorite restaurants you love, etc.

[@bridgecross]

A million isn't necessary. But it makes things much easier. Even if you live the downsized retirement lifestyle, even if you don't need the full amount, having that cushion is just really nice.

[@sallyjohnson5985]

The way inflation is going in the US $1 M is not gonna be worth much soon!

[@mikeshier1271]

Always the best information and support.Thanks

[@bertramguilfoyle4358]

I would be interested in seeing what percentage of people planning on retiring in the next few yes have defined benefit pension plans. We are probable reaching the tail end of the group of people whose employer offered the classic defined benefit plan. I think the answer to the million dollar question is very different for the next generation of retirees.

[@danieljacobs6921]

My wife and I are 42 with a net worth of over 1.3 million. I handle the retirement and outside investments for our savings. We do not own bonds, but we do have an emergency fund and other cash that can support us for at least two years . Hoping to retire by 50-55 with 2.5-3 mil. Not having any bonds in the portfolio really supercharged our wealth accumulation. We will have to get a part time job just for health insurance.

[@keithss67]

The 4% rule is good as a general guideline. But it’s important for people to use their brains. If the market is going down hard and you feel you are taking a big hit, you may want to dial back on the spending and on taking withdraws. Taking that big trip to Venice, or installing a jacuzzi tub in the back yard might have to wait till things turn around. The big problem is people get wedded to the idea of something like the 4% rule and then feel the need to stick to it no matter what. If you find that you can happily get by on taking out 3% or even 2%, why are you taking 4%? Leave it there, because down the road you may need (or want) that extra money 💰

[@sct4040]

There is a minimum required distribution, it used to be at age 70. Not sure what it is now.

[@generatorjohn4537]

@@sct4040 RMD (Required Minimum Distribution) was raised to age 72 a few years ago.

[@generatorjohn4537]

My financial planner told my wife and I that we needed to have $75K in savings in the event the market (portfolio) went down and monthly disbursements were suspended.

[@skibum6422]

@@generatorjohn4537 That sounds like good advice.

[@davidpowell3347]

My suspicion is that 2.5% is the new "4%"

[@emilye126]

U fixed my happiness 😊

[@cliffluxion7019]

Thank you for another insightful presentation. I especially appreciated your comment about cash flow versus asset level. I worked two full-time careers for two decades so that we could have both a pension and Social Security along with dividend income from investments in retirement. Don't plan to have the house paid off, though we could, as we earn far more in the money with the money actively invested than we would if it were all tied up in house equity. Also, don't have any plan to sell any equities for distribution purposes from our retirement accounts as the dividends should be a reasonably predictable third leg of the stool. Not a fan of the 4% rule, personally.

[@maryrobie4752]

Thank you

[@johngill2853]

The 4% rule is not that you should assume you will get 4%. Where do you get that from. 4% is from the Trinity study and it's considered a safe withdrawal rate for a 30-year period. The Trinity study does not assume anything, it's historical data

[@lauraarnold8117]

I sat down and figured out how much I actually need to live month to month. Utilities, house and car insurance etc. Then I went back an entire year to figure out how much I spend on groceries, got an average. My car insurance will go down and certainly I wont be driving to work. I have tentatively picked out an senior insurance plan. And these are in my current budget. I am paying off my mortgage while still working. I really can live my current lifestyle on less than a SS check. Plus I will have a small pension. And yes I can downsize my house if needed. I feel much better now. You cant buy piece of mind.

[@myvenusheeler]

Good for you. Have been doing the same for four years now. Started logging all my month to month expenses three years before retiring to see where the money really goes. I live damn good in retirement. In fact, because my home is paid for and I have no debt I even put $200 a month in my savings account from my SS check. Travel, major home repairs, vehicle replacements will come from 401k. Life is good.

[@rchn1315]

1MM has been a number for decades, what about inflation and healthcare costs?

[@NSPresbyterian]

Happiness is 2 'p's and Fallacy is 2 'l's

[@steved2841]

That was bugging me, too.

[@billimbriale8535]

No spell checker on a white board.

[@SanePerson1]

It was amusing that when he got to the happiness item, it suddenly acquired the second ‘p’, but fallacy remained as ‘falacy’.

[@yep3172]

Did anyone else notice hapiness?? I very much appreciate your videos Schmidt too btw!!!

[@yep3172]

As soon as I sent that, I saw the fix where you added the P @ 5:28. You caught it too :)

[@gybx4094]

No. The financial analysts are assuming you need to maintain the average big city salary to retire. It all depends upon cost of living, debt status, retirement income stream, savings accumulated, and "contentment". I kept a detailed budget in Excel for nine years prior to retirement. I knew what I needed and cost increase forecasts. With no debt, SS, and a small pension, I'm actually making a profit in retirement without even touching the IRA's.

[@HolySchmidt]

Good point Gy

[@mikeshaw4610]

Why are people in debt going into retirement. Part of retiring should be getting out of debt.

[@asianfilmfan1]

I find great enjoyment driving a sports car and always have. The first at I bought was a sports car. It is an experience I enjoy. Thanks for the video and hope a sports car is not stuff.

[@user-ey9bt7fs6n]

Lots of variables. I do remember back in the late 70’s, early 80’s when pensions started their way out and 401K’s started the replacement. Some of the old timers would say “ you’re going to need 1 million dollars to equal my pension” I assumed from that he meant his pension was $30,000 because in the beginning 1979-ish I also kept hearing the 3% rule. In retirement I hope to teach my grandchildren how to make dang good pizza 🍕

[@juniorcrandall8933]

Housing costs usually #1. Real Estate Taxes, Homeowners Insurance, maybe HOA, plus repairs. New Roof and a New Heating and cooling system are usually the top two.

[@strongwoman2174]

Not that it matters but Is that $1 million per married couple or each person?

[@skibum6422]

Household I believe.

[@billimbriale8535]

Great question... and it does matter.

[@wildflowerwind6941]

My thought exactly.

[@bigjohnson7415]

I've always said myself that everyone's situation is different. If you pay off everything, have no debt, live modestly, a huge amount isn't necessary. Investing for streams of income added to Social Security and other income considerations is a viable goal. Also perhaps leaving the "Full Time" high stress would and take a "Part Time" gig, or even develop a post work career doing something you want to do that can generate a small income to help.

[@MattJMillsNZ]

Should really put in the title what continent country and city this pertains to, makes a big difference.

[@dipaknadkarni62]

Thanks. Great channel.

[@user-yx3zl4kh8h]

Travel to visit Chicago? Maybe after I buy some body armor.

[@TheOrangekrate]

Please tell me what the conservative investment is that pays 5% so I can buy some ASAP.

[@mrbbkk]

ARR 11%

[@jimfarmer7811]

There are utilities that pay around 4%. If you figure capital gains you can easily earn 5% per year.

[@billimbriale8535]

@@mrbbkk Tanked when Covid hit and hasn't recovered.

[@mofomedic5753]

GGT is paying 9.4%. Great stock I own over 10,000 shares. Cost is around $9.35 a share currently. Pays a yearly dividend of .88

[@jimfarmer7811]

@@mofomedic5753 A thinly traded fund with a 9% dividend is not a conservative investment.

[@droneview8351]

Retiring with student loan debt - wtf?!?

[@mister_ray]

$1M just is not much anymore. We are just at the start of high inflationary period.

[@johngill2853]

And what do you think the median retirement savings is in the US?

[@rayanderson3164]

Debt trumps everything else. Get it under control and you're 80% of the way there.

[@ScottysBackYardBBQ]

my dad retired qwith no money. living just fine

[@jerryg50]

To live in most places in Canada with a sort of degree of comfort and not worry about food, rent, phone, data, and television services, the average family needs a minimum of $60K per year income before taxes. With $1M invested in to dividend equities the best you may be able to get is about 4.5% to 5% average. You would have to spend some of the capital if short. At the age of 65, if the $1M is properly managed you would not be able to spend it in your lifetime, unless spending the capital without consideration about correctly managing the money.

[@easylooker]

Need to account for inflation and the high likelihood for the government to tax most of your retirement

[@billimbriale8535]

You can predict future tax rates???

[@tomj528]

There is no one size fits all, ain't that the truth! My wife and I find ourselves so far out of the norm that no one bothers to write or plan a single thing that applies to us. Luckily I've been able to figure it out, find what's possible and even the "good" about our situation. While we could begin 4%ing our portfolio and be just fine as likely we won't outlive our money but we're going to continue as we have been as we enjoy our modest lifestyle and to continue to work our long term tax free plan for as long as possible. While there's no travel in our future, we're planning on spending more time at a family member's lake cabin as we've been invited to do so. Most importantly I can control our spending, our income taxes and even sidestep inflation at least so far.

[@tyroneshoelaces9742]

Saying NY is such a general term. If you live in upstate, say, Syracuse, it is just as affordable, if not more affordable than anywhere in NM. Yes, taxes are probably higher, but I am sure there are more expensive attributes in NM compared to upstate NY. The cost of a modest home is very affordable in upstate.

[@in4theride75]

With inflation at the rate it currently is anything under $2 million and you won't be retiring in the USA. If you think social security will still be around in 20+ years you are going to be quite devastated.

[@pauledwards5607]

If you don't have much other income, and your living off SS, which I will be as are most people, you cannot go into retirement with payments...especially a mortgage or a rent payment. Right now I am still working and saving to buy a house. Whatever amount of money I am able to raise (and I plan on taking my retirement 3 years earlier than needed and save all that to help to do this), that's what level of home I can have. Period. BUT...I will have a shop and a place to keep my reptiles and fish I have always kept and bred...also a nice side income on it's own...and I will garden and do all the things I have always wanted to do! But right now, without my rent (which is $800/mo), my outgo is only $600 a month. A couple grand in SS I can live off just fine with plenty of money left over. I have done away with all my debt, I have no car payment, and I plan on having my place of living paid for, so I can make it fine on a small piece of land with my son adjacent to my land. I'm hoping he gets married and has kids so I can be a Grandpa someday. So, no debt, no other payments, your "home" paid for and anyone can make it on SS alone. You aren't in a nice house in a nice neighborhood traveling all over the world, but remember, happiness is more important than things.

[@HolySchmidt]

Totally. Checkout my website on the S-Curve which says basically: you get maximum enjoyment from you early dollars spent and minimum enjoyment from you last dollars spent: HolySchmidt.com/SCurve

[@MS-ih8tg]

Well done.

[@willelliott5052]

Obviously average people retire with less than $1M net worth. Average is not a good plan for dignity. I am approaching retirement age, and I created a very sophisticated spreadsheet to project inflation and income taxes, given monthly distributions from pre-tax retirement accounts. I know that a decreasing investment principal is a bad plan. I want our investment principal to remain static for our heirs. In today's dollars, I would not retire without a minimum net worth of $2M, and this would include a paid off home. We are nearly there now, and I will probably work until we arrive at $2.5M net worth.

[@moeball740]

I was hoping to retire but the wife and I had 2 teen foster kids land on our doorstep so I guess I'm still working a few more years.

[@tarheeljim]

Another helpful video…thank you! BTW, what app do you use for your whiteboard?

[@scottfiscus1431]

Phenomenal video, thanks

[@miketheyunggod2534]

Not if you have a pension. You still have uninterrupted stream of income.

[@alansach8437]

You need what you need. It's different for everyone. I get really tired of the countless articles and videos that insists that YOU need a million or 1.5 million or 1.9 million I think is the latest number being bantered around! Many retired seniors live on Social Security alone and are perfectly content. Some people live in big homes that they still owe on. Others live with their kids! Some have mortgages and car payments, others don't owe anyone a penny. Some love to travel, others are happy to spend their time reading or working in the garden.

[@JohnSmith-ps7hf]

My accountant said the new FI number for a single person is 2.5 mils, but I have only 1 mil total. 🙃

[@theburnetts]

I understand what he is saying. But I didn't find this super helpful. I am 56 and planning for retirement. The two biggest questions are how much income will I need annually in retirement and how long will I live. I don't know the answer to either of those questions. A rule of thumb I have heard is to expect that you will need about 70% of your current income. Obviously there are a lot of variables in figuring out how much income I will need - will I have a paid for house? how much will health care cost? will I travel a lot? Also there is inflation to consider. More than likely during my retirement inflation will cause the buying power of my money to go down 1-2% every year. So I probably need to account for that. If I retire at 65 and live to 85 then that's about 20 years of retirement. If I live on about 70% of our current household income, take inflation in to account and supplement my retirement savings with Social Security income I have calculated that I need about $1.5 million saved by 65 for it to last 20 years. Obviously if I spend less every year and only live to 80 then I won't need as much. For me the biggest unknown is what my annual expenses will look like 20 years from now.

[@bookmagicroe9553]

Travel often means going to visit children who live in other states.

[@jaldeborgh]

Most people don’t plan for retirement and most never really retire until they simply can’t work anymore, which is a painful reality. A large number retires will also work part time after retirement from their primary job. The idea that expenses drive the size of your retirement nest egg is a bit of a fallacy, you income stream really dictates your expenses, unlike the government we can’t live beyond our means forever. Most of us need roughly our pre-retirement income stream as reducing your standard of living is very difficult. Unfortunately $1M isn’t a lot of money anymore, if you plan on a 30+/- year retirement, which is very possible today.

[@dougm1985]

i've saved for 30 years, but, i've also lived a great life. new cars, travel. ect. i also, had that number in my head. and i just might get there. if not, then i'll just have to live on what i got...... no debt is the key. and remember you can't take it with you.

[@gworker5249]

happiness

[@tmusa2002]

I’ve heard the “fee only” financial advisors a couple times now. My accountant said they are hard to find and the one he is affiliated with isn’t much and it’s worth it. He uses the same place. Is there an easy way to find a fee-only advisor?

[@davidpowell3347]

John C. Bogle's "Little Book of Investing" is sort of my fee less investment advisor also consider his "Common Sense about Mutual Funds"

[@Troy_Built]

I tried searching but only found 4 in a metro area of 400,000. Then I didn't use any of them yet because asking around no one had ever heard of them.

[@cnwil4594]

If one has multiple streams (pension, annuity, etc.) of income and a reasonable savings with minimum or no debt, they should be ok...

[@Salty_Knuckles]

Rather than New Mexico, you should have used Mississippi as a better example for the low end. I just moved here because of that.

[@garyhull5617]

I hope not!

[@andrewdiamond2697]

I think to retire today, I'd need $3 million. To retire at age 62 to 65, $2 million should be sufficient. The longer I work, the less I will need.

[@justincase2830]

I was told that once you turn 72 you have to take 4% RMD on IRAS and 401ks in the year you turn 72 and before you turn 73. Can anyone confirm this/ Thanks.

[@nakho3550]

Yep, sure so but why is this a problem? You simply withdraw it and park it somewhere else. At age 72, you only have 10 good years left max.

[@jameswitte5676]

Yes, you have to take required minimum distributions starting at age 72. You use the IRS life expectancy tables to determine the amount. Each year the percentage increases.

[@justincase2830]

@@nakho3550 Thanks! A decade to go. Let's party!

[@justincase2830]

@@jameswitte5676 Thanks for your response James.This clears that up.

[@generatorjohn4537]

Yes that is true, age 72 you must take the Required Minimum Distribution (RMD). If you own any Roth IRAs or Roth 401ks then no RMDs. Those are tax free accounts!

[@meatman6660]

Lots of good stuff here! I like the 3% rule because it will create generational wealth for our children and grandchildren. Going forward with international economic competition our future generations may not have the opportunities Boomers had or our parents from the Greatest/Silent generation had after WWII. (The stories they told from the Depression and both our Fathers going to War were a great oral history before they passed. Yes wife and I are Boomers). The stages of retirement spending are right on. I have had this spending discussion with my Financial Advisor team of CFA's & CFP"s and have panned for this high early spending, low midterm spending and high end of life medical spend. We are VERY fortunate with both our parents getting us through collage during an era on no student loans. Yes wife and I have $1MM 401k. I sought out companies with benefit packages during my career(and still had fun, 6 different companies) so wife and I could retire early like our parents did. She went 1st at 56 and I was able to walk away the next year on my 60th birthday. No debt for the last 8 years before retirement.

[@FIRED13]

I like a 2-2.5% rule even better if you can swing this. Imagine what THAT can do for generational wealth!