I'm 63 with $1.6M. Can I Retire? Social Security & Withdrawal Strategies To Improve Retirement Plans

he couldn't believe that this one small tweet to their retirement plan made that big of a difference so in this video i want to show you a comprehensive retirement plan for a couple that saved 1.6 million they're both 63 and they want to stop working completely and start drawing from their retirement savings most importantly they don't want to run out of money or just make any not smart financial decisions so this video is going to help answer what's a reasonable withdrawal rate for them when to start social security and then what small tweaks we can really make to improve the success of their plan but first welcome back if i haven't met you yet i'm dave zoller and i own a wealth management firm named streamline financial and we help people plan for and live their ideal retirement but we also know that not everyone needs a wealth management team acting as their family cfo that's one reason we do these videos so if you're near or in retirement subscribe so that you don't miss the next one now let's jump into this example this is don and mary i changed the names but don and mary and there's a few assumptions that we should be looking at for their plan so first off they're both 63 they've got 1.6 saved they have a million in their ira 401ks they've got a roth of 200k non-retirement is 300 that's actually in a trust account and they have cash at the bank that's 100k their home is 500k which is a moderate-sized home for illinois home prices right now next they've got retirement income really the only thing that they have for retirement income that's guaranteed from government is social security don at 2500 and then uh mary at 1500 and right now current plan shows them ideally it's starting at age 67 for them and again there's a few more things to look at if they do end up retiring so right now the plan says 67. next we've got expenses so what do they actually need coming into the bank each month so that they can live and do the things that they want to do they need 8k each month coming in but then they also need to pay taxes a lot of this money in the beginning is going to be coming from iras so that's all taxable money and in our plan we've got expecting about 18 12 k of of expenses and again just note none of this is is specific advice for you this is just an example really it's it's a made-up name it's based off of someone that i was talking to but don't rely on this for for your own retirement plan but i've got more on what you can do to to help plug in your own numbers coming up soon so anyways expenses in retirement 8k inflation is going to be 3 per year in this example and then next they want to travel that's important to them and then they want to help their adult children and future grandkids as well we're going to plug in some numbers once we get the base plan created and look at what different expenses might be for those two things now for returns on this plan usually this is what we do really almost all of the time we want to create the income plan first for our clients and that helps us then decide how we should be invested and how if you want to say risky or how we should be allocated for for investments but the things that we're looking at for their income plan is the three bucket strategy bear market protection plan and then for them having seven years worth of withdrawals was a good number in in bucket number one if you if you've ever looked at the bucket strategy where it's not going to be as impacted when markets change or maybe the economy changes seven years worth of patrols made sense for them next is once we've got the income plan mapped out then it's the investment plan that comes second and really with the investment plan we're looking at in order to achieve these things that they're looking to achieve and to get to these goals that they're they're hoping to to get to a moderate return of about six percent for the pre-tax monies and then four percent for the non-retirement monies in this plan scenario would actually get them there so that's what we've got as one of the assumptions and really there's things that we can do where you're adding value or return to specific things in the portfolio some of the the smart money decisions just your investment allocation and how well diversified you are as you're thinking about the four different economic seasons that we could be going through and having asset classes being prepared for each one of those and then also there's tax alpha what's the withdrawal strategy and then how much are we paying on tax there's some good things you can do there but for this case all we have to think about is that's going to be their average return over the next 30 years so let's jump over to a visual representation of these assumptions and by the way if you're watching this and you're wishing that you could see your exact scenario here to help you make better retirement decisions check out the free diy retirement plan link below i'm recording a few videos to help you design your plan with some of the specifics all without having to hire a financial planner so check that out if that that sounds interesting to you so here's don and mary's sample plan and what it looks like visually now as you can see each one of these bars is a year of their life so next year they're 64 and their investable assets are about 1.5 now they're gonna start to withdraw from their investable assets but they're also growing at a assumed six percent per year the thing that's also growing here is their expenses because of inflation growing at three percent so looking at this it's going all the way to age 95 here now that could be a long time for you or that could be a good guess at making sure you have enough money to to live to 95 but if that's what they wanted to do things don't look that great they might be saying or maybe you might be saying well chances don't seem that high that given our family history that we're going to make it to 95. so maybe they're okay spending a little bit more and having less later but here's a different way to look at it what we like to see is this thing called monte carlo analysis and looking at the longevity risk and this breaks it down year by year and this will show you what the chances are that they'll have enough if they make it to a specific age so as you can see at age 84 85 things still look okay if they made it to that age then there's a really good chance that this plan will be successful but then they get to age 87 and things start to look a little bit worse pretty rapidly as expenses continue to grow by three percent and then you get to 89 and there's less and less of a probability of success here so that's helpful to look at for them just to look at ages really we do like to plan to age 95 because it's better to be safe than sorry so looking at this didn't really give them a level 10 confidence for what they were looking for but there are a few things they may be able to do to make this look a little bit better like i mentioned this is actually what they were pretty surprised by and as i'm pulling this up really just an important reminder i don't love saying it like this but your retirement plan is pretty much useless that's because life changes markets change the economy changes your family situations change that's why the ongoing process of planning that's really what's invaluable so it's not about creating a plan and saying oh i'm good or it's not so good it's continually updating it when things change and then forecasting potential scenarios before they happen so that you know you're making smart money decisions so let's look at these two potential scenarios for for don and mary and by the way if you like this video please click the like button so more people like you might be able to to see it so let's get back to the plan and as we were talking mary was saying that she did really enjoy the interactions that she had with with her clients she was in a consultative role and she really did enjoy that and she loved sharing her knowledge and helping people that way ten years ago she actually had a part-time consulting business and she wasn't making that much compared to what donna was doing at the time but she really enjoyed it so with everything virtual now we looked at what would be a reasonable income if she was able to work part-time on the time she wanted really virtually from anywhere from home or if she was traveling so she thought 40k per year with a few clients was very reasonable so we pulled up the plan and then we took a look at that what would happen she had a part-time consulting gig and she did this for about five years you can start to see the plan looks a little bit better there was one other thing a possible scenario that i'm going to get to which is selling the illinois home and then downsizing now that all the kids are out of the house one other thing that i forgot to show you was traveling for five years and spending a little bit more in the early years for the next five years so that they could have fun while they're young and while they can still get around very easily that makes a plan look a little bit worse and then helping the kids and grandkids starting to gift them money or maybe help with the down payment for a house that starts to look a little bit worse so without the mary's part-time income things start to look a little bit even more worse than the original plan as you can see but with mary's part-time income and with selling the house in illinois and then downsizing and having about 200k that uh they can either turn into retirement income or use somehow the plan starts to look a lot better so they were pretty amazed at the the change that this could make really these were a few ideas this is the first iteration of the plan but they were amazed that it makes such a big difference there are a few more improvements we can make to their investment returns by using our streamlined investment system then also how much they're going to be paying on tax using our streamlined income system and tax planning system but those are things we do every year and that add alpha and value to our clients plans and that's really not a one-time plan thing but all in all the big takeaway here for you is your plan is important but the continual updating of your plan is more important if you want a plan and one that you can update but you don't need an advisor or want an advisor check out the diy plan below if you are interested in learning about how our wealth management office can help coordinate all these different parts of your financial life look for the link below as well for a short phone call with me i hope this was helpful to review that plan together if it was please like this video and subscribe and then i'll see you in the next one in future videos i'm going to show you how this order of withdrawals from these different types of accounts that are treated differently tax wise like pre-tax post-tax roth and then your trust account or individual account how that can really improve your tax situation and then when converting to a roth makes sense so be on the lookout for those videos and have a great rest of your day take care

Channel: Streamline Financial

Views: 240,965

Keywords: retirement calculator, retirement planning, retirement income, retirement investing in your 50s, financial planning, how to retire, 4% rule, retirement, roth ira, investing, 3 buckets strategy, how to withdraw money in retirement, how much to save for retirement, financial advice, social security retirement, how much do i need to retire, retirement withdrawal strategy, retirement planning at 60, retirement planning at 50, Chicago financial planner, naperville financial planner

Id: 2gPJZsdHNBE

Length: 10min 4sec (604 seconds)

Published: Wed Oct 20 2021