Why Living Off Portfolio Interest No Longer Works in 2023

Living off the interest generated by your portfolio may not be as safe as you think…
…With interest rates on the rise, it's tempting to park your money in a high-yield savings account or bond. The problem is, inflation will erode your purchasing power over time, leaving you without enough money to get by down the line.
James explains why living off of interest isn’t a good idea, and what you can do instead.
Learn the tips & strategies to get the most out of life with your money.
Get started today → www.rootfinancialpartners.com/
Subscribe to be notified for future videos: / @rootfp
_ _
For more resources and content, check us out below!
🔔Subscribe to our channel to learn more about all things portfolio management / @rootfp
🎧 Listen to our podcast readyforretirement.buzzsprout...
🧑‍💻 Visit our website www.rootfinancialpartners.com to learn more about us
👥 Connect with us on Facebook / rootfinancialpartners
📷 Connect with us on Instagram / rootfinancialpartners
🔗 Follow us on LinkedIn / 18347030
_ _
⏱ Timestamps ⏱
0:00 Introduction
0:45 Higher rates in the last few months
1:22 Example of Living Off Interest
2:30 Purchasing Power is Diminishing
4:07 What Should We Do?
4:47 Change Your Perspective
5:25 Example of Using Stocks
8:30 What’s the Takeaway?
9:20 Diversification in Your Portfolio
10:00 Outro
Other videos we think you'll like:
About Root: • Financial advisors wit...
Worried about retirement? Start here: • Worried About Retireme...

[@rickteeden8656]

I’m 70 years old, retired and heavily invested in dividend etf’s. I’m hoping to be able to live off of the dividends and leave the principal in place.

[@davidhankins5708]

This strategy may work for some, but you are assuming that an 80 year old is spending as much as a 60 year old. Doesn't happen. Even with medical issues as a person grows older, there are safeguards built into Medicare where the risks are limited. This is just my observation. There are exceptions to this but few and far between. Thanks for the video!

[@jimclark5037]

I was thinking along the same lines ... when I'm 75 the $40k only has the buying power of $30k, but then I'm also in my "slow go" years and need less! if the 20 year treasury note rate hit 5 % I'd want to buy!

[@jameswitte5676]

Home health care and nursing homes are not covered by Medicare and are very expensive. It’s quite possible you’ll be spending more at 80 than 60.

[@cmvox7132]

what you fail to mention is that people don't spend the same amount of money every year of their retirement. Most money is spent in the first 5-10 years. After that, age causes people to slow down, do less, etc.

[@sergiosantana4658]

With the record market gains of the the last decade many are retiring today with burn rates on portfolio of 3% or less . You add this to the COLA on social security and or pension makes it reasonable to have a high percentage of your portfolio in fixed income earning 4.50 to 5.25%.

[@rs2352]

Good insights, however there are two things I take into consideration. - Consumption of capital amortized to your personal view of life expectancy (e.g. 99 years old) - Decrease in non-medical spending as you age. [Today's budget with travel, auto, etc. vs. Tomorrow's]

[@sergiosantana4658]

Having asked many retires the conclusion is that in retirement your expenses follow an upside down smile The pattern is you retire and your expenses increase during the gogo years then they start slowing down in the slo go years and at the no go years your expenses have been reduced to what you were spending when you first retired .

[@kevinkanter2537]

Blanchett's paper showed that it is really a crooked smile with the "slo-go" years declining from height of "go-go" years (like Ty Bernicke showed of 1-2% / yr decrease of expenses) & "no-go" years has a sort of probabilistic upturn of expenses for those retirees (about 4% w/ 4yr @60k/yr of med expenses ; some 1% w/ extended dementia care) --- but majority do not show this upturn of the smile in later years. Basically the inflation-adjusted expense increase does not occur & especially is dampened because the expenses in later years (like housing, auto, gas & even food / dining out) are decreased so are not impacted by CPI as much as in early retirement & especially not in accumulation years.

[@MWS1960]

Right now CD is producing 5.5% on a 6 month and 12 month CD. It’s a good way to get a good return while things are in the improve mode with hopefully lower inflation

[@darrenprior6339]

"While things improve". Here's the problem with that logic. The reason you're getting that return is because inflation is most realistically running higher than your 5.5%. But let's say we get a grip on real inflation and it heads down. That means the interest banks are prepared to pay on your investment is most likely going to go down. Meantime the stock market (that you are no longer in because you stuck all your money in "risk-free" savings accounts) will go up. Example of the past year. Just a hint of rates going down has driven the stock market up exponentially over the past year. Has the market risen higher than your 5.5%? You bet your ass. Most people who "wait for things to improve" wait until the market tops and start buying back in, only to find their investments take a dive. Then they wish they were back in savings accounts because they got in at the wrong time and got out at the wrong time. No bank pays 5.5% interest without a caveat. How much do think banks make with the money you 'lend' them, in order for them to pay you 5.5%? Well, take a look at bank stock returns over the past year. Therein lies your answer. And newsflash. While you were parking your money in those bank accounts, the banks were paying very good dividends and giving outstanding capital appreciation. So there's no such thing as a free lunch.

[@anthonyiannozzi6777]

Unless the banks go bankrupt and you try to get your FDIC money. FDIC fund can only cover 1% of deposits. It's a scam.

[@Ryu-won9128]

You will still have the $1M principle in later age to spend till you die. Why do you ever want to preserve it?

[@muubie]

Hi James, I think in your illustration around 5:49 you probably meant to say "If you parked that $1,000,000......", not $40,000.

[@mstraction]

I was just going to reply that but I checked the comments to see if anyone caught it....

[@UnCannyValley67]

9 months later, and he hasn’t corrected it yet?!

[@hubster4477]

When you're 80 you dont eat as much as you used to, probably dont need a car as much, dont travel as much, dont pay for life insurance, your house is paid off, who cares if the cost of living goes up a percent or two.

[@pensacola321]

What you talking 'bout, Willis...? I never withdraw from my portfolio, and I have lived very well in retirement for 16 years. Pension, Soc Sec an annuity and a bit of interest and dividends. I would urge retirees to have such a plan if they can. Who needs the anxiety ? Obviously, you have to know your own situation and make adjustments along the way....

[@kevinkanter2537]

very rational & considering an annuity for any income gap is by every study the most efficient way of decreasing risk....

[@cmvox7132]

Pensions are all but dead now for most Americans. Since the 90's

[@gcburkett]

I would say a bigger risk of going primarily short duration bonds is that interest could also fall again leaving even less money. You could also point out the problems with taking too much risk in retirement like being 100% in S&P 500 and start retirement in 2000 or 2001.

[@johngill2853]

Actually since 2000 the S&P 500 would have worked. Actually either 1999 or 2001 are fine with 4% plus inflation Those who were 100% stocks and diversified with international are in trouble There are threads on financial forums following this with details

[@desertrose4475]

Thank you! I really need to hear this today. Perfect!

[@ShamileII]

Great video! I'm semi-retired from my aluminum manufacturing company and my dividend growth portfolio is set up exactly like this. It's all about growth in income....not a portfolio number.

[@michaelcatalano6950]

The inflation argument is a fair point but ignores that people can and often do adapt their purchasing to avoid the impacts of the stated rate of inflation.

[@mundie33]

Bingo. Especially in retirement. There are very expensive end of life expenses of course but if you’ve lived a frugal life you’re probably living on much less than your prime earning years

[@michaelswami]

Excellent video. Dedicated dividend growth investor here, looking to one day live off the cash flow from my portfolio. For now, all goes back into the portfolio. I’ll never touch principal, and probably won’t touch much of the dividends.

[@kevinkanter2537]

I agree that the idea is to have the fixed expenses covered by SS / pension / annuity [or in your case you have a sufficient taxable account generating dividents] ---- then everything else is just optimizing cash flow w/ tax minimization.

[@keith8325]

Mr. Conole, I think you've lost touch with who you're addressing. You're telling retirees to maintain a "long-term approach "; a non-sequiter. To steer retirees to take on equity risk at current market valuations is riskier than inflation risk. The former is damaging near-term, and the latter takes decades to materialize. I'm in 100% cd's paying 5.6% and growing. To get that kind of guaranteed return is something we've been waiting 20 years for. Why rain on our parade? Savers are finally getting rewarded, Thanks be to God (and the goofy federal reserve).

[@mjmf1430]

@@keith8325I don’t think Conole is totally wrong: high interest rate is only going to come down, high interest rates would stay forever, this year Fed in fact would be starting to cut interest rates. So on still need to invest a portion of the portfolio into bonds and/or equities to not just beat inflation but to continue the 4% drawdown scenario he has given in his example.

[@Kimmer]

You are spot on James! People don't understand the risk of keeping so much of their money in cash and "safe" investments, but this poses a real risk for long-term growth to beat inflation. Thanks for your great videos!

[@HappyPenguin75034]

Yes we do understand

[@BSinNH]

This is easy..... Invest in ROTH as much as possible. Buy quality CEF's paying a monthly divvy. If you have little to no debt, this and SS will be enough to allow you to live comfortably while maintaining your principal. Think of it as an annuity with a death benefit and w/o surrender charges and high expense %. My goal is $6-8K thru ROTH monthly with another $3600/month in SS. Will be much more than I take home now.

[@gameburn178]

Your basic idea is correct: interest and safe modest money may no longer be the best way to assure security, let alone wealth accumulation. I will say this: I have seen my in-laws die, my own parents age and die and all of my uncles and aunts pass on. Not a single one of them had extreme medical expenses, in fact almost all died in their own homes. The truth is: retirement is cheap and easy -- just make sure you have either one of these: investments or no rental costs because you own your own home. Rent is death in my part of the world: not controlled by inflation and fully deployed as a means for other people to make safe money out of a basic human need. You can choose to pay rent rather than own -- but you had better have some wealth accumulated to allow for higher than inflation increases in that rent. Or, a rent may simply be unavailable where you live.

[@Sylvan_dB]

Equating risk and volatility was an academic simplification introduced (IIRC) by Markowitz in the 1950s. Volatility is not a risk. It might be scary, but there are several more dangerous risks.

[@tekootianderson]

Sounds like the 3 bucket strategy---that's the short, mid, and long-term buckets.

[@dailamipuang5843]

yes

[@scottsteibel]

I agree. Thanks.

[@garysmothers3234]

Thanks for this apparently controversial video. It certainly got people talking. I for one think your logic is spot on for the majority of investors. And yes, there are many who simply feel safer with the fixed rates available now. However, if you're in good health and could have 30 or more years of retirement then the approach as suggested sounds like it could actually be the safest in terms of wealth generation and maintenance of purchasing power. It all comes back to risk tolerance and goals.

[@kealgu]

I understand his thought process, but it does not make sense to take unnecessary risk right befor retirement. You are being given a risk free 5% now and if you have a low risk tolerance this is a no brainer. Why do we assume that past performance will be a good indicator for future returns....look at the Japanese stock market for the last 30 years. We are probably headed in the same direction.

[@pa9121]

Now let's look at the stock market from 1927 to 1957...

[@Discovery_and_Change]

5:51 "If you parked $40,000 in the S&P 500 in 1993 and took out $40,000 per year..." Do you mean if you parked $1,000,000 in the S&P 500?

[@user-bt9cm7ze4c]

This is totally age dependent. Someone who retires at age 65 could care less about making millions in capital gains over the next 20 yrs. When my older relatives retired all they cared about was paying the bills and going to bingo.

[@charlescz1974]

I’m 68; virtually everyone we know is experiencing parents and relatives in their 70s and 80s and beyond, running short on funds because of elder care including memory care which is not covered by Medicare. Only a small portion is covered like meds, some assistance, (not even any 24 hour period), and hospice, when that time happens. Inflation kills off your purchasing power as you point out. Diversifying is paramount.

[@dancasey9660]

And this is where you start doing Roth Conversions. Maybe for the years prior to Social Security or pensions you keep your portfolio conservative to avoid sequence of return risk, and start a Roth Conversions strategy all the way up to your RMD'S age. Your Traditional IRA/401k can remain relatively conservative, and the portion that is slated for Roth Conversions can be put into a more aggressive portfolio and allowed to run for 20 - 30 years. Hopefully, by the time you get to RMD age, you have most of the heavy lifting done, and have just enough to cover living expenses in your traditional funds to supplement pensions and Social Security for several years, without having an onerous tax bill.

[@HappyPenguin75034]

Of course this is true. But sometimes inflation is less and even negative in some areas. And it’s fine to eat up some principal. If you are 60 and live to 90. How much do you eat up assuming 3%. Did he say.

[@L1stener]

Some charts would be helpful in conveying this.

[@timsharpe8342]

I think you mis spoke at 5:50, before that you talk about 1 mil, then at 5:50 you say "what is you parked that 40k in the S&9 500", I think you meant to say ""what is you parked that 1 mil in the S&9 500"

[@DavidSmith-lp5tz]

Interesting content. May I suggest a similar conversation about taking only dividends in a 100% portfolio for a retired 60+ year old couple.

[@Jack51971]

One could take IRA accounts away from growth stocks and go to 5 to 10 dividend paying stocks yielding 6 to 10 per cent. However, put some into both dividend paying stocks, some growth stocks and some growth ETFs or mutual funds I suggest Vanguard or Fidelity. Low fees. I love Vanguard VGT.

[@m.r.2183]

Yes we need stocks but I doubt most retirees have 100 percent stock portfolios. The age in bonds rule or 100-age rule give or take indicates about 50-55 percent in stock at retirement age. The video doesn’t talk about the other side of the equation that being fixed income alternatives to CDs short treasuries high yield savings etc, but those are the best cash and fixed income options we’ve had for a year or more. why would you forgo risk free 5.35 percent for the short term when you’ve gotten wasted in bond funds for the last two years.

[@datbio7302]

Hi James, I have all stocks in the retirement account and planning to hold them for long term 10 or 20 years. But, in market down turn, it is just hard to see the stocks to go down and my portfolio going down. Any advise to stay the course of long term investing with stocks when stock price goes down.

[@jimclark5037]

great discussion. I'm retiring this year and will take a mixed approach, stocks, bond funds, ibonds and treasury bills and notes. will take dividends into my 401k cash account and use to rebalance & take funds. will try to wait until soc sec full retirement age to take advantage of its inflation increases. if 20 year note hit 5% id love it, i think that rate would stay ahead of inflation. be pretty happy with 4.5% too!

[@CheckThisOut77]

Yes, DO wait until Full Retirement Age (66 1/2 - 67) to start taking SS.

[@kevinkanter2537]

are you thinking of a substantial part of your "bond" allocation in 20 year notes? any idea of % of total portfolio would be your target?

[@pubmeatman]

Why invest in bond funds when you can have equal or better returns in individual bonds/t bills/CDs etc. without the downside risks?

[@m.r.2183]

Or 70 if you can do it.

[@m.r.2183]

Or 70 if you can do it.

[@99gadget99]

Ive always been a fan of balanced funds. A little bit of everything that works all of ups / downs by a managed team. I’d say for a retiree, a 50% balanced, 25% S&P Index and 25% in Treasuries / CDs.

[@pizza4me298]

Just sell covered calls against your stock/ETF positions. Can easily add income to any position.

[@Boulder836]

Lot of flaws in this method of thinking. First, nobody will likely recommend putting your retirement portfolio in a long term 30 year fixed CD. But for the next 3-5 years locking in 4.5-5% rate of return could be a good idea at best or an ok idea at worst…. especially for a portion of your portfolio in retirement. Sequence of return risk is always something to consider at retirement and suggesting an all stock portfolio during this stage of life is extremely risky. Times are different now than the last 13 years. We have higher inflation, higher interest rates, quantitative tightening and a constant threat of recession. All these factors deserve a different method of thinking for retired people.

[@daveh6402]

James never said to invest your entire portfolio in stocks. He said you still need balance.

[@anealson1807]

I am 75 and live on pension and SSN. Total 2,5K a month and I have no debt. In addition to my house and a car which I paid off. I have only 300K on my CD's. Do you think I am OK to retire for another 15 years? BTW where is your home base?

[@mundie33]

Also: income annuities with COLA or inflation triggers…..

[@davidfolts5893]

A Master Class in creative financial thinking brought to you by James Conole.

[@S62r]

All you need for developed markets is s&p 500- these are global companies already and small cap / value are highly correlated but lower return. Index funds are a bad way to invest in emerging markets- there’s no easy way to do it.

[@pubmeatman]

Isn’t that what an asset allocation is for? 5%+ fixed income interest sure makes a higher allocation to fixed income more effective. I have a 40/60 AA and interest on that 60% more than covers my expenses. 40% allocation to equities is more than enough.

[@jpsy422]

The “risk” example of 4% inflation would provide roughly 26 years of same-standard livability.

[@user-bt9cm7ze4c]

On top of stocks i own and manage rental properties. Been doing this for 15 yrs and all i can say is if you really want income only buy the damn real estate. My rents have gone up 60 pct in the last 8 yrs and i am in total control of who lives in my homes.

[@keithfantinalgo4665]

Where do you think i should park my emergency fund?

[@stevec9669]

How do I know if I have the right mix?

[@Pops2]

With modern potential longevity, wait till 70 to collect ssi. That will give you 40 grand plus 125% of your max ssi benefit. Thanks to my old buddy Josh.

[@kevinkanter2537]

scandlen? or is that your own buddy? LOL

[@denniss3980]

When you add Social Security even if you kept that 1M under your mattress you could still maintain that 40K adjusted for inflation well into your 90’s

[@jpsy422]

The 40k annual spend would be in addition to that.

[@sunandevise9934]

But agree with you !

[@mattball2700]

At 5:50, I think the text should be "if you parked that $1M" not "$40,000"

[@lisar901]

I just opened up a Robinhood investment account. A money card.

[@brahmmauer7437]

What about social security?

[@cjeccher8128]

at min 5:53 you say and wrote put 40 k in S & P but I believe you meant $1 million

[@ndirish1114]

I would higherly recommend everyone read The Essential Retirement Guide: A Contrarian's Perspective by Frederick Vettese….the book addresses the spending ie inflation myth that so many studies and the financial industry perpetuate. Our expense needs change as we age and as such our financial needs lessen in many categories and yes some categories go up, but more go down and as such income projections are overstated…

[@kevinkanter2537]

yep --- or just read any of the Ty Bernicke papers (no need to read the book, Reality Retirement Planning) or use the FireCalc retirement calculator which is nice -- even Personal Capital allows a % reduction of expenses w/ initiation age + minimum floor settings .... yep - the base case in so many studies and the financial industry is still pushing that illusion Thanks

[@brahmmauer7437]

You can make well over 4% on stable and safe dividend paying stocks.

[@snow40741]

If I am trying to live the barista fi life ...no debt..want to work pt at 56 how do you pull 4% from your retirement when you really don't have access to your retirement money until 59 1/2?

[@shawnmcelderry]

You can use 72t SEPP withdrawals out of an Ira or access a 401k if you meet post 55 withdrawal requirements and you will not pay any federal or state penalties only regular income tax

[@dforrest4503]

Don’t have all your money in retirement accounts. Or, learn about the Rule of 55.

[@sergiosantana4658]

Depending on your total income paying the 10%penalty might not be so bad . Example Your income consist of 30k W2 income+24k early withdrawal total income is 54k your total fed tax will be $4724+a 10%early withdrawal penalty of $2400 = Tax bill of $7124 .Your total tax and penalty effective rate is 13%.Keep in mind that in 2 years the lowest marginal tax rate will be 15%.

[@CalmerThanYouAre1]

Dividend growth investing FTW! $SCHD ✅

[@70qq]

🤘🏻

[@richardcarlin1332]

Very accurate

[@RetNavyChiefBTC]

This doesn’t make sense for all. If you retired early as I did, and your bridging to a $4500 SSI check, this 5% cash return now is a blessing. It is much easier to accept stock market volatility when you are working and not drawing from your portfolio monthly. These companies that are doing amazing things, are also doing foolish things to alienate their customers. Couple that with declining birth rates and increased consumer and public debt. I believe the statement, “past performance is no guarantee of future results” has never been more of a pertinent warning.

[@VoltLover00]

So its better to invest in a market that's about to drop because the Fed is trying to cause a recession?

[@gaymoderate4403]

Agreed haha. I normally like this guy's advice but he's acting like the market can't easily drop another 10% by end of year. You could invest in a CD for two years and then go back to stocks.

[@ordinaryhuman5645]

There's always an argument for the market being about to drop. It usually doesn't. More importantly, does it really matter if that does happen in the next year? I'm not going to be spending the vast majority of my money in the next year anyway. Being hyper focused on what the Fed is up to this quarter is silly for your 30+ year retirement plan. And really, if you're anywhere near a traditional retirement age with enough assets to care about the stock market, odds are good that you'll be dying with excess wealth unless you're silly enough to waste it all on extending your deathbed time by a week or a month. The median 60/70/80-somethings all have more wealth than adults in their late 50s. Average grandmas and grandpas in the US aren't suddenly running out of money in old age; they're maintaining or accumulating (or they were broke before they got to old age and stay that way).

[@dforrest4503]

@@gaymoderate4403 if you think you can time the market. Most people can’t.

[@mere_cat]

When will you know it is time to get back in? The stock market can always drop another 10%. Better to pick a allocation that works for your timeline and risk profile.

[@davidhankins5708]

Not trying, they are!!

[@fialee8ca132]

The premise is flawed. The goal should be to die with minimal assets, so that means you enjoyed your money we while you were alive. Money won't do you any good when you're dead.

[@kevinkanter2537]

neat perspective - definitely dependet upon upending the 'live below your means' mentality --- sort of the Die With Zero By Bill Perkins idea --- sometimes ya just can't spend it all so then the question comes up about what do you do with the money if you find that is your situation ..... definitely a 1st world problem ...

[@gameburn178]

Not true for some of us: goal is to live well, acquire some wealth and pass it on to the next generation (children and grandchildren) so that wealth accumulates. Even if you have no children, the accumulation of wealth is empowering for yourself and for whomever inherits. It can mean that even the most basic things -- e.g. education and housing -- have a good chance of working out nicely. Spending money isn't the goal, using money is.

[@deepaksubramony5438]

If I had a $1M principal, why do you assume that I want to only live off the 4% interest generated each year for 30-years, and keep the principal completely intact for those 30 years? It would mean that if I retired at 65, I would still have $1M in principal at 95. Now why would I want to die leaving $1M unspent? Why wouldn't I just make up for inflation by drawing down from my principal as well? I am not going to live forever, right? People should pick whatever asset allocation that allows them to sleep at night. There is no need to imagine scenarios where someone lives forever and needs to keep up with inflation for the next 100 years.

[@sunandevise9934]

James: it depends how many millions you start at 60 , If you start $5 millions, I think more than enough.

[@RootFP]

Yes you’re absolutely right. A large enough portfolio can sometimes offset the wrong investment strategy.

[@Corkfish1]

This is a pretty rudimentary discussion about asset allocation.

[@testodude]

No kidding. It's a 10 minute video for novices.

[@Zxt45]

Wow you really missed the boat here dude

[@gaymoderate4403]

You're assuming that inflation will increase my expenses by the same amount of inflation. It's just not true. Inflation is nuanced and doesn't affect everyone in the same way. And even if inflation DID increase my expenses by the same percentage, I could adjust my spending to keep my overall budget the same (i.e., eat out less, fewer vacations).

[@gameburn178]

You have made a valuable point here: not everyone acquires the same assets or lives in the same part of the world with the same resources/opportunities. Where I live, real estate is very important: great for wealth accumulation and a good way to avoid the problem of paying rent -- or even finding rentable spaces.

[@markreid7]

Is this example in a country with zero social security?

[@teatree6228]

Dont take risk after you retired.

[@dylantaylor4822]

Clearly hasn’t read the Trinity study which accounts for inflation

[@dins5066]

This makes no sense.if you're 60 and you have a million dollars and take the 4% (40k) in 10 year's you still have a million at 70 and could then increase it to 5% and get( 50k) and so on. If you're alive past that. You continue to make adjustments. If I'm still alive at 80 doesn't matter if I have 1 million or 800k . My point is 1million starting at 60 and living off the interest sound better than possibly losing in the stock market and having less. You gamble young not old.

[@AustinSWarren]

I think you missed a part of the equation here. The issue isn't that only taking 40k yearly from 60-70 still leaves the principal. The issue is that your cost of living doubled from the beginning due to inflation. You would need to be targeting 8% yearly which is more than you projected and may be unachievable now that you're dependent on the returns. Because your returns aren't outpacing inflation, you will burndown that account balance faster and faster as you require higher returns on am increasingly smaller principal. Without adjustments to returns, at 70, you will have a principal of roughly 400k. At 75 you won't have a return fund. The only solutions around this are to have contributions that account for this at the expense of the present (which will likely decrease QoL for a breakeven retirement QoL). Or take on higher risk with purchasing power in mind.

[@techshark6181]

You're not understand nor thinking it through... If you NEED $40k and then along the way, with in that year, you now need ANY more, you now have to sell you're million, that is a loss and taxes added, so now you have LESS than a million and you owe MORE in taxes AND You need MORE money and have LESS to draw interest on.. It is exactly why you need the facts of passive income instead of believing you can live off a set interest, you are ONLY pulling 40k, but each year, it cost more than the last, for you get that same "$40k" You fail to understand because like most you assume everything just sits Exactly as it did in year 1, when NOTHING is showing it ever will

[@mishmishsregularlyirregula7988]

I think you make sense in part and the creator of this video also make sense . The 2x other replies fail to also realise that % returns will vary as well - possibly up and or down further . If your talking the present time then yes both yourself and the video creator make sense - however who knows what will happen in the future . You can get an idea from historical events and patterns but no one predicted Covid , the plague , the Great Depression so just get on with life and live it , save some money , take calculated risk and make change where and when you need to .

[@DavidMontgomery1]

You’re not taking into account the effects of inflation. Also you can’t just increase your interest rate from 4% to 5%. That doesn’t make any sense.

[@ikyiAlter]

The creator is okay cause he restated that you should not invest all in stocks. And in another video, he pulled some other guy's study and that study said 50% in large cap and 50% in government bonds can usually sustain 4% withdrawal rate in a million dollar retirement savings. So you have 50% of your $$ take the risk of stocks and 50% of your $$ safer with the government bonds. This is just an example and you can always fluctuate. And the idea behind it is if you're 60, you probably still have another 30 years to go. So even if covid hit when you're 70 and you survived as an elderly, you still have 10-20 years to recover and bounce back up. Everything basically bounced back and recovered. And they're also steadily increasing like "normal" now. Well, that's what he said and I don't think it's wrong. Both approaches have their own risks and that's why there are ETFs from 100% stocks to 0% with the balance being bonds. These products are aimed for those that don't want to think and meet their goals as they get older. ​@@mishmishsregularlyirregula7988

[@boydmking1]

I believe crypto is the way to go?

[@kaisersouze41]

Where in this scenario is SS and SS COLA increases?? Oh that's right ur just trying to scare people into investing their nest egg in the stock market. #JobSecurity

[@HappyPenguin75034]

SS isn’t mentioned. Maybe we shouldn’t assume its existence. Which is fine just call it welfare for all then. It will increase. Or I will just get money to pay my utilities.

[@PortSpice-lc2cn]

I believe no one

[@allenw1188]

No way. Don’t forget about your FEES. I have done that and it is not worth 8.5M

[@tonycicarella876]

Sorry, I disagree with this one. I had a very diversified portfolio and I lost about 60K during the downturn. I can’t afford risk like that. I’m parking my money in CD’s. I will NEVER go back into Stocks at least not as long as we have economy destroying Democrats in office.

[@tonyggir]

I am 78 100% in 3 stocks up 100% this year. I live off the Capital Gains. No dividends or bonds.