Can I Retire at 62 with $150,000 Saved For Retirement || Married & Single Scenarios

Can I

retire

at age 62 with one hundred and fifty thousand dollars

saved

for

retire

ment? That's what we'll see today on the Your Financial EKG YouTube channel. In reality, we will see two very different

scenarios

. The first scenario is going to occur. If you are a

married

couple who has retired, you have a hundred and fifty thousand dollars

saved

for

retirement

and you just want to make sure your

retirement

savings last forever, so we have to ask ourselves how much retirement income can you achieve? We build from a hundred and fifty thousand dollars in retirement savings, we look at Social Security, we look at spending, and we add in inflation, how long will it last?

The second scenario will be very similar to the first, except that we will only have one. person, so for all of you

single

people, we're going to do the exact same strategy, but for a

single

person, can I retire at age 62 with a hundred and fifty thousand dollars saved for retirement? Let's get into that right now, okay, first. What we want to see are some assumptions for our

married

couple. Well, now we both know that they are 62 years old because we talked about how just a second ago their social security will be eighteen hundred dollars a month, that's for both of them. of them and that's the average social security today, so eighteen hundred dollars for both of them, that's thirty-six hundred dollars a month now in retirement.

Savings in an IRA or several IRAs, you have one hundred and fifty thousand dollars, let's assume this. all pre-tax money is fine, so they have a hundred and fifty thousand dollars in retirement savings, their expenses are fifty thousand dollars annually. Now I get that number from the US Census Bureau, which did a study or surveys every two years. and fifty thousand dollars is the average expense for a sixty-year-old couple. Now keep in mind that when you retire you have what you call the Go-Go years, the slogo years and the no-go years, in the beginning they are the Go-Go years. years you go and go to Paris London maybe Paris Texas maybe London somewhere here but you're going to go and then you get into the slogo years when you don't go as much maybe you go on a cruise from Fort Lauderdale to go on a plane trip to Budapest and then you have the off years where you don't travel anymore and you don't spend as much on retirement because you're older.

Now keep in mind that in the years without going, the main expense will be health care, so it will always need to be planned, so we are 62 years old, we have one hundred and fifty thousand dollars in retirement savings and we are wondering: Can I retire? and for how long? my retirement income is going to last, so let's look at this and I want to walk through it very slowly so you can understand how we look at this as a financial advisor how we work with couples to make sure that no matter how much they have in assets, no matter how much you save for the retirement, we can get you into retirement, we can get you through retirement and we can protect your ability to stay in retirement if you want to meet with me, all the information is in the description of this video. calendar link actually and you can go directly to my calendar so let's look at this we have a hundred and fifty thousand dollars and I want to look at this in 10 year increments so I'm going to go 62 72 72 82 82 92 or at least until money runs out, so let's look at this in 10 year increments and we're also going to have some assumptions about our growth and our inflation, so the first assumption we're going to make is that all the money that's invested in the market is going to earn six percent now the reason I'm going to use six percent is because that's two percent behind the 50-year average for the S P 500 the S P 500 over the last 50 years has averaged 10 percent, but if you add inflation, the average is eight percent, so we're going to get to six percent, which is two percent behind the S P 500.

For now, the second assumption we're going to use is an inflation of three percent, so three percent is going to be our inflation rate on our fifty thousand dollars a year, so we have fifty thousand dollars a year in expenses, but next year it will be three percent higher and The way I actually did this was I went into the software put in all of these values ​​and we actually broke down the inflation on a monthly basis. Well, I like to look at inflation monthly instead of annualized because that way you can get two different numbers and so I want to be as accurate as possible. as possible, especially if we are planning for retirement, then we have fifty thousand dollars in expenses and we are going to start with four thousand two hundred and sixty-eight dollars a month, those are our expenses and our social security is thirty six hundred dollars. a month, that's our social security, which means we need six hundred and sixty-eight dollars a month from our 150,000 in retirement savings, in addition to what we receive in retirement income, so each month we receive thirty-six hundred dollars In Social Security benefits, our expenses 4268 increase each month with three percent inflation, so the first month we need $668 from our Ira.

Keep in mind that this is pre-tax money, so these are raw numbers, so if we needed fifty thousand dollars net, we would need about five thousand dollars more a year for taxes, so in this case we are looking at this as a gross figure, so this is gross, it's not net, okay, at the end of ten years we would have one hundred and thirty-five thousand. three hundred and nineteen dollars, so that's 72. So what have they done over the last 10 years? Expenses have grown by three percent. That is the average inflation rate. Now note that the 106 year inflation rate since we kept up with the CPI is correct. around 3.27 now there are decades that are higher like the 1970s and there are decades like 2008 to 2018 where inflation is lower, you have to look at this as a whole, you can't pick a certain year and say oh Hey, boom, inflation is actually going to increase. at seven percent because that's what it did in the year 2022, where the Market will absorb my entire retirement because that's what it did in the year 2022.

You can't do that, you have to look at it as a whole, so We have 135,000 at 72 years old. Remember that both individuals are the same age, so they are both 72 years old. We are still assuming a six percent rate of return and a three percent inflation rate, but our expenses have now increased to five thousand eight hundred and eighty. eight dollars from 4,268 to 588 and our social security has grown to four thousand six hundred and forty-four because if we have a tail increase in Social Security we are executing a colon increase of three percent. Sorry, we're actually running a 2.5 percent tail increase on social security, so we take 588, subtract 4,644, and we get one thousand two hundred and forty-four dollars, so now we need this monthly 1,244 of our 135,319.

So which increased, it basically doubled from the age of 62, so now how? In reality, at age 82 we have zero dollars, so we went from age 62 to 82, about 20 years passed with 150,000 in retirement savings, fifty thousand dollars in annual expenses and we stayed at 82. Now stay on Keep in mind Note that we have run out of spendable assets in 82. but Social Security is still there, so that won't end, so it is still being paid in this case, we haven't figured in a house, we haven't figured in any precious metals nor any other physical asset we have. We're only talking about spendable assets because what we're trying to do is find the solution on the board first to see if I can walk away. 82 is pretty close to where we want to go.

Well, now I don't want to leave any pair at zero at 82. So at this point we would take this scenario, bring it into the software and start creating your financial EKG because now we need to get into the nitty-gritty because this is what's going to happen. when we arrive. in the software we're going to break down these expenses, we're going to look at the inflation of these expenses individually because keep in mind that if there's a mortgage payment on that fifty thousand dollars, let's say there's a mortgage payment of two thousand dollars, it's not going to have inflation, so what that's going to do is reduce the overall inflation rate in this plan, so now the money might last longer, but what we're looking at here is just saying, hey, this is the foundation of the house Right, Jesus? said the man who builds his house on the rock when the storms of life come the house will remain we are trying to build our house on the rock what is the foundation and then we transfer the foundation to the software and that is when we get into the nitty-gritty the issue, tax planning, inflation, all the fun stuff, okay, so let's look at this scenario now that we're at 82.

So what do we do right? There are a couple of things we can do, we can reduce expenses properly and if we reduce expenses maybe this money is going to last longer what would be another thing we could do is work a little more if we work more we are going to pay Social Security a little longer we are going to delay our social security remember if you take Social Security at age 62 you will only get 70 percent of your full retirement benefit, if we can delay this to 63 64 65 66 we will get a larger benefit if we wait until age 67 for this couple, they were born after the year 1960, they will get one hundred percent of their full retirement benefit and if they are a great performer and eat broccoli and wait until they are 70, they will get 124 of their full retirement benefit so we can work a little more and delay Social Security.

Another option, we could work part time, which means that the money we would need from our investments, the $668 a month, is twelve hundred dollars a month, maybe we can get that. that working at Home Depot or working at the Tropicana field being an usher for the Tampa Bay race or doing whatever but we can make up for this that means we don't have to touch our retirement savings maybe you can be a consultant for your job I have a lot of clients who retire from a stressful full-time position, become consultants, make about half the money they used to make, but that helps them pay this monthly benefit and they don't have to work as much, so it's a win-win for them. all. so those are some of the things we can do in this strategy, let's look at one thing, let's say the couple says, we want to retire at 62, let's reduce these expenses because that's the only thing we can do now that I can.

Show them that that will make sense because we talk about a lot of other decisions, work a little bit more, you know, work, those are personal things, you have to make that decision on your own and then we would work. through that in the software, so let's delete this and go back to 62 years. And what I want to do is very simple. I want to reduce expenses a little bit and I want to see how long this money will last if we do that, so let's reduce expenses by 500 per month, just 500 dollars, you can probably find 500 in savings in your monthly budget, take a good look at your cable bill, we stream everything in our house, but most of my clients in their 50s and 60s use a lot they haven't gotten on the streaming train yet watch streaming cut the cord, you don't need a thousand channels you probably only need three in my house it's like Disney ESPN my wife likes Food Network so that's all we have Okay so we have a hundred and fifty thousand dollars.

We will see this in decades again. We're going to take the same assumption: six percent, three percent, but we're going to reduce expenses by 500, so let's get started. with three thousand seven hundred fifty-six dollars a month in expenses, so this is five, this is a reduction of 500. Well, we have made a reduction of 500 in expenses, now Social Security is thirty-six hundred dollars, we start it at 62. so this is social security, which means we don't need much, what can I do right with these calculations, let me see my work, just make it a hundred and fifty-six dollars a month from our retirement savings So now it's 72, actually increasing our money to $242,850, which is really good because we're making six percent, we're not taking out more than six percent, so we're actually making more money with our money because we don't need that much money per month, this strategy works the same if you think about the last one we just did, if you work part time or delay Social Security, we are trying to keep this number as low as possible, trying to that distribution rate is as low as possible.

Call that the guardrail rule, think about driving on a road on the right and I always imagine those desert roads that you see in the movies, maybe you live in Arizona or New Mexico or somewhere where there is a desert, but you are driving down this desert road and we have guardrails on the side of the road, okay now the guardrails keep you on the road so with this we are trying to keep our spread rate low so in your case if your spread rate is, say, three percent, that means thatThey need three percent. percent of their investments annually to retire there.

Investments are fine, they don't need to be situated or positioned as if they need a distribution rate of six, seven or eight which is off the rails on the other side of the coin, I don't want your investments to be so conservative that your distribution rate distribution may show up as one or two percent, but you really need three that are outside the guardrail rule. We want to keep it on the road so we don't mess up. en72. we have 242,850. now the same assumption six percent rate of return three percent inflation our expenses have now increased from 3756 to 5181 dollars our social security has gone from thirty six hundred to four thousand 644. which means we only need 537 dollars , so at 72 years old we have grown to three hundred and twenty thousand dollars in retirement savings, so it continues to grow because we earn six percent, we are taking out this money but we are taking out less than what we earn. so we earn more than we take out, which is great, which means our retirement savings are growing and essentially, let's see where we are at 100, what do we have? $166,356 so from 82 to 100 we ended up with $166,356 in retirement savings that's pretty good and all we did was reduce expenses by 500 because that's something you can control remember there are things you can control during retirement and there are things you can't control, what you can control are your expenses. what you can't control is what the market does what you can control is how long you work what you can't control is inflation so we have to master what we can control because if we worry about what we can't control that's Let's waste our entire retirement.

Okay, so this was a couple asking the question: Can I retire at age 62 with a hundred and fifty thousand dollars in retirement savings? Now let's look at just one person. Well, can I retire at 62 with one hundred and fifty thousand dollars? Fifty thousand dollars saved for retirement as a single individual. Now you have some unique circumstances when you're married and then when you're single in retirement, but there are some challenges you have as a single individual that married people and families don't have. especially in retirement, the first challenge is that your retirement savings are on me and I mean you are the only saver, the only contributor, the only investor in your retirement savings.

The second challenge that you have as a single individual in retirement is just getting a Social Security, a pension, a set of investment accounts to withdraw your retirement income from, so what we want to do today is address some of those challenges and See if I can retire at age 62 with one hundred and fifty thousand dollars saved for retirement. Here are our assumptions: We're 62 years old, our social security is eighteen hundred dollars a month, that's the average social security we're looking at for retirement. Savings of one hundred and fifty thousand dollars a year and our expenses are forty thousand dollars a year.

This is how I understood that the US Census Bureau says that the average person in their sixties has fifty thousand dollars in expenses. I guess in my experience it's a married couple, single people don't have fifty thousand dollars in expenses and retirement unless they live in higher costs States think California New York Massachusetts things like that so I backed off by about ten thousand dollars so I went to forty thousand dollars in expenses now this could be less this could be more I just want to show you a simple explanation so that 62 Let's make a couple of assumptions: we will earn six percent a year in the market and we will have a inflation of three percent, then our rate of return will be six percent, our inflation will be three percent now.

Our expenses will start at three thousand three hundred and thirty-three dollars per month and our social security will be one thousand eight hundred dollars per month, which means that from our retirement investments we need one thousand six hundred and fourteen dollars per month. these are our expenses that we need to live on Social Security which is an income guaranteed by the full faith and credit of the United States government, whatever that means to you, okay, which means we should retire from our retirement . Investments 1614, this is disgusting. We are looking at this as a raw number. This is all before taxes, so it's 72.

We have zero dollars, we're out of money, so it doesn't work. Forty thousand dollars in expenses, one hundred and fifty thousand dollars in retirement savings on average. social security doesn't work obviously if social security is higher or if you have more retirement savings it might work but in this case it doesn't work and I'm actually using a rate of return that is much higher than what I see it normally for people in their 60s a lot of times when I do investment analysis for clients, when I look at their investment portfolio, they ask me, "Hey, would you help me manage my retirement assets?", a lot of times their rate of return . it comes in at about four and a half five percent, so I see it a little bit higher now that it's two percent behind what the market has averaged over the last 50 years it's just not a good scenario, it doesn't work, and?

Can we control and what can we not control? I can't control the market I can't control inflation, but we can control how much we need in retirement expenses, how much we need in retirement income and we can control, maybe by working a little. a little longer now I don't want to do the work on a slightly longer stage. I just want to look at the expense scenario, so let's go here one hundred and fifty thousand dollars, we're going to use the same six percent rates of return. three percent let's draw a line here so we don't get confused now we are going to lower our expenses to two thousand five hundred dollars a month so we were at three thousand three hundred thirty-three dollars now we lower them to two thousand five hundred dollars a month now keep in mind You really have to review your budget thoroughly, which I like to do for my clients when we work on their entire financial EKG for someone.

In fact, I send you an advanced exam. spending plan and if you have discussed an advanced spending plan with me, please leave it in the comments how beneficial it was for you. I had a client. Just email me today and say hey Drew, it was so eye opening to look at our spending now. I'm not trying to tell you that you need to have a budget. I'm not trying to tell you to be a Dave Ramsey person. I like Dave Ramsey. What I'm trying to say is that we just need to reduce our expenses. on paper so we can know what we need from our retirement investments in order to retire, we don't want to just walk blindly into retirement, hoping that rainbow unicorns and pixie dust will get us through, we need to have a plan .

You've never driven anywhere on vacation. You can't go from Tampa, Florida, to Panama City Beach, Florida, which is about six hours away. You can't go there without a map, like you can say, "Oh, I'm going to drive north and then I'm going to turn left and I'm going to go towards Louisiana and I'll get to Panama City maybe, but I'd rather have a map." map. I prefer to say, well, we're going to take 19 that will go along the coast or I'm going to go up 75, I'll get to I-10 and I'll pass, we want to have a map, we want to know where we're going, so Social Security. 1800 a month is fine, these are our monthly expenses, which means we need 761 dollars off our investments, which at 72 puts it at 122,000. 215 dollars, so we have gone from 150 to 122 reducing expenses. , I think you can see where this is going. 122.

Let's go to 82. Same rates of return. Same inflation assumption. Expenses have now gone up to 3533 because of inflation. Social Security is 2322. Right, that's the increase. colon. Well, that's two and a half percent on Social Security, which means we need 1,211 discount on our investments, which leaves us at zero. It just doesn't work. it just doesn't work unfortunately it doesn't work so what can we do? A couple things. I'm going to get the. I'm going to rip off the band-aid first. We work more. We work more. So we increased our retirement savings. We continue. getting the contribution we still get the match from our business we work a little more it doesn't have to be full time maybe you'll go back to working part time we just talked about this with the marriage scenario if what you want is $761 a month You need income for retirement and you're determined to quit that job because you're stressed beyond belief.

We have to earn $761 from somewhere for this to last. What do you love to do? What do you like? Do it well. Maybe you go to work. on a golf course because you love playing golf, you get paid to work on a golf course and you get golf for free, it's a good deal. I have too many clients to do that. I love baseball. I go to Tampa Bay Rays games all the time. time I talk to the ushers because they're all like 60 and 70 years old I say listen I want to be you one day I want to retire I want to come to Tropicana Field whatever they call it at the time and I want to watch baseball for free and help people find their seats and see the kids enjoy baseball and sing the seventh inning stretch every year that's what I want to do that would be a dream for me that's amazing so maybe we'll work longer something else we do if we work longer we delay Social Security and By delaying Social Security we are increasing our guaranteed income because that's what we need is a pension you're single Me and I so if we can increase our social security we can increase our guaranteed income and we can increase the longevity of our assets keep in mind that these both

scenarios

are zero, but Social Security still pays.

Social Security still pays, so if Social Security is going to keep paying even when we're away, maybe we should try to delay it as long as possible. Well, those are the things we have to do now, you have to decide what you want to do right now. Listen, if you want an EKG, you want to talk to me, go to the description below. It will be an honor to help you when you schedule an appointment. with our signature you talk to me you don't talk to anyone else you understand me and we are going to go through your retirement thank you very much for watching God bless you goodbye thank you foreigner