Do you Really Need $3 Million to Retire? | On The Money

foreign article about how you need three million dollars to retire have you in an upward concern I'm Ryan Wheeler's host of the on the money YouTube channel thanks so much for tuning in and stopping by if you like the content we're putting out give us a like down below hit the Subscribe button and we'll keep sending you awesome videos to make them and produce them so this is kind of one of these things where you see this you go well holy cow Ryan that's a you know that's a three million bucks is a big number folks and make no mistake about it it is a big number to save and and for retirement especially but the question is is do you have to have three million bucks well I've been getting a lot of calls at the office a lot of concern and the reality is we have to kind of look at what the article was saying because this article and Survey is popping up on all kind of retirement news websites outside of Bloomberg so the biggest thing I noticed when I read this folks was this is an article or survey done for Traders people that actually trade stocks on Wall Street and the first thing I kind of thought about was well does that make sense here in Texas because the cost of living up on Wall Street in the New York area is much much greater than it is in Texas in fact a dollar goes much much further in the state of Texas than it does in New York so that alone kind of challenges that that stature that you need three million bucks to retire but I don't want you to feel bad like you're not repaired because you're getting ready to walk out the door and say hey tell the tell this to tell my my boss to take this job and shove it and I've only got a million bucks so what I'm going to do was kind of look at a couple and look at their situation and see kind of where they were and if they have the ability to retire so this is Sam and Sally both age 60. they both work uh Sam's employment incomes 85 000 a year and salaries income is about sixty five thousand dollars a year all right so that's kind of what they do and they're again they're both age 60 and they're wanting to retire right now today and wondering if they can do that well next thing we got to do is look at what their um their current savings is okay uh their current investment assets and what we're going to see here is that they've got a hundred thousand dollars saved in money that's outside of retirement account money and they have nine hundred thousand dollars saved inside of what we call inside a retirement account money all right so to that end they've got about a million bucks overall and if you looked at how their current assets are allocated in the bond and stock market they're about a 60 40 allocation and that's what's known as the balance portfolio pretty common by the way all right so what I want to do is say okay without making any changes to their portfolio or anything like that let's kind of test whether or not they can retire uh and so the next thing we got to look at is what are their goals all right so their goals are actually reasonably modest their goals for retirement income is seventy six thousand dollars per year they've got their home paid for they don't have a lot of debt they don't have eight debt as a matter of fact and their expenditures aren't too high so their goal is 76 000 a year Well we keep scrolling through here and we look at all right based on this when do we look at taking social security okay because social security for them is going to be super important and the reason why it's going to be so important is twenty five thousand and twenty two thousand dollars a year nearly forty seven thousand dollars which is a substantial amount of the retirement income almost uh almost 60 percent of it is going to come from Social Security now a lot of people would say well Ryan can we delay Social Security can we wait to take Social Security and the answer is yes we could the challenge with doing that though in this particular scenario is if they wait to take Social Security until 66 or excuse me in their case would be 67 seven their portfolio has to produce all seventy six thousand dollars per year over that seven year period to get into Social Security and folks if your portfolio has that kind of drain on it for a six a seven year period straight that can really potentially offset the long-term probability success of your overall retirement plan so in this case Social Security is such an important fact factor for them and we absolutely want to make them want them to take it at 62 because they don't the long-term provincial success their plan goes down dramatically and they may not make it all right so that's their social security plan we look at their Investments with their overall goal all right so we want to go to um for retirement purposes and by the way we've got to both living to age 90. all right um so next thing we'll do is look at their results and what we're going to see in the results is going to be interesting and so what we do here is we can run a thousand trials all right and basically we're going to see out of 1 000 trials 850 of those trials had a success a pass rate right so they have an 85 chance of long-term success and their overall plan so the answer to the question of hey Ryan could I retire with a billion dollars a day and make it work the answer is yes folks but there's a couple things to consider one of those things is is what is your actual income need because if I were to raise their income need up to a hundred thousand dollars a year this long-term probability success is going to drop below the confidence Zone and probably not be anywhere near 85 percent in fact I already did it was around 57 so that's not a high enough probability success for them to continue and be able to retire that's okay though because what could they do well they could in fact delay retirement a couple of years all right and save some more money and have a less time of a less Long uh Span in retirement with their portfolio has to produce income that's one thing could do anything they could do is they could rebalance their portfolio and try to be more aggressive that might work all right another thing they could do is look at the timing of Social Security we already kind of did that and determined that the best time to take social security for them was 62. so the reality is they could either spend less work longer increase risk or change the way that takes Social Security but the bottom line here folks from a very high level view these this couple with a million dollars at age 60 can absolutely retire provided they can live on Seventy six thousand dollars a year in income so folks don't let that survey from Bloomberg scare you too much be getting a lot of calls in the office about it I just proved to you mathematically that a married couple aged 60 with a million dollars taking social security at 62 can retire with seventy six thousand dollars a year in income grown for inflation over time and have an 85 percent chance of long-term success of not running out of money in their Golden Years pretty awesome stuff there I'm Ryan Willis thanks so much for tuning in to the all the money YouTube channel powered by Allied wealth if you like the content we're putting out please hit the like button down below and give us a subscribe as well we'll send you out new content is it make and produce more content foreign [Music]

Channel: On the Money

Views: 23,509

Keywords: how much to retire, retirement planning, retirement, retirement planning at 50, how much do i need to retire, retirement planning at 60, how much to save for retirement, is 3 million dollars enough to retire on, retirement savings, retirement income strategies, retirement income planning, how much money to retire, How long will $3 million last in retirement?, Is a net worth of $3 million enough to retire?, Can I Retire at 55 With $3 Million?, Is $3 Million Enough to Retire at 55?

Id: CTNXIsjlF9A

Length: 6min 57sec (417 seconds)

Published: Fri Apr 07 2023