How Much Can I Expect To Spend In Retirement with a $2.1 Million Portfolio?
Navigating the transition to retirement can be daunting, but with a well-structured financial plan, it's possible to approach this phase of life with confidence and clarity.
In this case study, Anthony reveals the financial journey of Peter and Amanda, a couple on the brink of retirement, and explores how they crafted a robust plan to achieve their retirement goals.
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✍ SHOW NOTES & RESOURCES ✍
- Show Notes: onedegreeadvisors.com/?p=8713...
- Social Security: Start at Age 62 or 70? • Social Security: Start...
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- Where Should I Take Money From First in Retirement?: • Where Should I Take Mo...
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This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you.
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0:00 - Intro
1:04 - Meet Peter and Amanda
1:36 - Balance sheet
2:12 - Goals
2:46 - Income
3:46 - Savings
4:29 - Expenses
9:50 - Financial plan projections
16:58 - Cash flow report
18:24 - Key planning considerations
That projected rate of return range of 6% at 16:10 to 7% and then briefly to 4.5% really shows that the 20 years from 65 to 85 need to be INVESTED for results, not locked into a CD for security. How early could they retire if they invested in equities ie 60% VOO and 30% QQQM which would produce returns of about 10 or 12%
Totally agree. Pre-retirement investing way too low risk. If they want to retire early or more comfortably, charitable giving is way too high.
Appreciate you watching!
Enjoyed the video. A few comments/questions: 1) At 17:00 , the inflow/outflow graph is presented. You would expect the outflows to increase each year because of inflation. The dip in the year 2028 is due mostly to the mortgage being paid off, so that dip is understandable. But why is there a dip in the year ~2044 ? 2) Even in those scenarios where they appear to run out of assets, such as what appears to happen toward the very end of the graph shown at 16:25 , they would still have their home. At $1.2M in today's value, that house would be worth a considerable amount more in the 2050's. So in the unlikely scenario they were in need of liquid assets, they could always sell their home and downsize (or use the reverse mortgage).
Appreciate you watching! The outflows do vary because of several moving parts. They had wanted the extra travel budget from 65-80, so that increased budget for travel drops off in 2044 (and they would then expect lower travel expenses, and pay from normal cash flow as needed). In other years, income taxes vary. Like we referred to in the video, broad tax projections are shown in this plan. In other videos we often refer to that "tax valley" (low tax years) aim to optimize through such strategies as Roth conversions, harvesting capital gains or just taking income from IRAs within the lower tax brackets. Alex talks about that in this video around the 11:00 mark. [kzhead.info/sun/iM-dm8Ztn4RtlYU/bejne.htmlsi=arkE58WRe3IYWtqs]. Yes, the home equity provides a nice backup!
I’d like to see how wealth management fees play into plan. I think very valuable, but it doesn’t seem the approximate 1% is ever taken into consideration when I watch retirement videos. If you go by 4% rule, isn’t it really 3%?
I have always thought the same. It is only logical if 1% is being taken out as fees that only leaves 3%.
Or is it really 5%, you get 4% and they 1%.
Thanks for watching! We factor in assumptions such as fees, inflation, rates or return, taxes, etc. but again, they are assumptions, which is why a financial plan should be monitored and adjusted. The 4% w/d rate is a solid place to start, but Alex talks about the 4% rule vs. a dynamic guardrails based withdrawal approach in this video: kzhead.info/sun/iM-dm8Ztn4RtlYU/bejne.htmlsi=LFxyy0cLxgjWPyob
…or they could sell the house, move out of California and retire TODAY.
The thing about selling houses and moving is that it's expensive. As a seller, you have real estate commission expenses, lawyer's fees, and much more. And if you're selling your house, you still need a place to live. So are you suggesting buying a lower cost house in another state? Now you have all sorts of expenses associated with buying, including the lawyers again, and a bunch of expenses the banks may you go through. BTW, the property taxes shown on line 40 at 5:57 seems incredibly low. A $1.2M house in most sections of NY/NJ would be at least 3 and maybe 4 times that amount. So if you're moving from CA, avoid NJ/NY if you're trying to reduce your living expenses. And probably look at one of the nine states, as apparently many Californians have done, with no income tax. The other issue with moving out of state is separating from family, which is shown at 2:26 as being one of this couple's priorities in retirement.
@@ddenuci Yup - this is a "not unusual" example of a moderately high income Californian couple who bought property a long time ago and are now "locked" to their low property tax because of Prop 13. Prop 13 mandates that property taxes can be no more than 1% of the assessed market price at purchase (plus voter measures) and that the assessed value can not increase by more than 2% per year. Naturally in a market like CA, this means the assessed value rapidly falls below the assessed value and people who have lived there for decades are sitting quite comfortably paying little in the way of "their fair share" for the government services their taxes pay for. Somebody could pay $1.2M for an identical home next door and easily pay triple.
@@stuartclubb4302 Thanks for the explanation.
Many people do move out of CA in retirement to take their equity and pay cash for a new home elsewhere, often with money to spare. We work with retirees across the states often due to this. Thanks for watching!
All my family is in California, so we have no plans to move. It's not always about money.
Isn't the 401K max 23K in 2024?
Over 50+ .. 30,500 this year
@@wyzyguy726and 50+ also get a bump up in annual IRA contribution limits as well