How Much Do I Need To Spend $25k/Month In Retirement?
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Welcome back to the podcast, a special episode today. How much money do you need to spend twenty five thousand dollars a month in retirement? Now, some of you and your name laughing are like, what the heck? What I do with twenty five thousand a month, others go, you know, I could find a way to spend IT if you really said I was in a spot to do IT, but I really would rather a private tire earlier.

Maybe I don't spend twenty five thousand month, maybe it's six or seven or eight ten thousand month, but that means I have to work ten more years. Yeah, that's more attractive to me. Now that's where most of you fall.

So why are making this video, this podcast? Well, because there's a large amount people that listen to the show because of you guys. And I will often get asked a question, and then sometimes there be comments after I asked this question.

And that would happen in this instance, where I had put out a video on youtube, and this was a few months ago now, saying, how much do I need to spend twelve thousand months in retirement? And some of the comments look like this. Now i'm going to explain IT if you're just listened per usual on the podcast APP.

All good. And if you want to watch this on youtube, you can see what i'm talking about. So this is coming here, twelve thousand a month in california.

I just covers your mortgage. Other comments here, this was great. And forty four with around five million invested in just some vanguard stuff. Can I withdraw three percent per year? I just so many good different comments.

Some people here twelve K A month WTF i'm not going to say what that's for um and you can see a comment followed up saying that's not outlandish another person, no, it's not other people go I agree a little low, right for me fifteen thousand month minimum just to get in the parking law of the ballfield twenty five thousand a month is more like IT face smooth retirement so you can see i'm very late on this comment but I replied five months ago, said here you're like the i've coming out next few weeks I end up releasing a different style video this one is direckly in relation to that comment. So this is you're wondering ing, how much money do you need to be able to spend twenty five thousand months and retirement? That's what this key study this podcast is all about.

Now if you don't R T know my name is ali, believe I am the host of this podcast, the early retirement podcast. I am the vice present at root financial partners and am a certified financial planner. Where in this dopey share, how many of you guys know this year?

Now if you're listening right now, you know you can't see IT. I am wearing my color flower shirt. For those of you knew to the show, you will be so confused right now.

I can only imagine what you're thinking for those of you that have been listening for a few years saying he r yet love of the color flower i'm and explain what the heck this is. This is an awesome gift given to me my favorite gift of all time. My second favorite gift of all time is right here.

All highlight IT in light of kindness today. This you can see here if the camera homes in IT says anti cookie cut or jar, love the pot. why? Because I don't believe.

And just, hey, what's your risk tolerance on a scale of one to ten? It's like, okay, you're at two and you're eight. Great, go retire. Well, guess what happens when I ask that couple of their riis tolerance when markets are down? Very different answer.

So I want to give you an example with this whole color flower thing, which is most of you, if you save and invest, well, you're gonna a lot in taxes. You say, hey, i'm not going to worry about that taxi stuff until later. I just pay for most of my career.

Maybe I retired in the next five years and I could spend way last, but in a hoo cares already paid so much. I'll deal that one of later. Maybe i'll let my kids, let the leaches deal with IT.

Just kidding. Some you guys don't like when I say leaches, but anyway, so the point here is I want you to avoid only having to eat color flower in the future. Some you are like, I love color flower is a horrible example.

Relax, right? Uh, some of you are like, no, get IT. So I eat a little bit of color flower.

Maybe a little bit each year, pay a little bit in taxes, fill up a certain bracket at each year. That means in the future, i'm not gonna only have to eat color flower. I'm going to get to eat whatever I want.

Now I don't eat to convert so much that there is no color flower in the future. I want to yet to make sure you're optimizing your taxes. It's dop.

I know it's dope, but I try to do things in a certain ways that you can remember that. So let's look at this example. Now i'm going explain IT once again.

But some of the concepts, if you want to see what i'm talking about, you're gonna want to be on youtube. Now I am, of course, a podcast. Listen myself.

I listen to a few podcast where they say, you know, you should really go over here to listen to this and go here. I like, now I get that, but I like listening here. It's easier.

Youtube has ads is more annoying. I get that I want to make sure i'm helping all of you to the instigate. I personally pay for youtube premium.

So that's something that you guys want to deal. I get no commission by saying that, but just something to keep in the back your head. I personally, youtube is my new cable, so I youtube everything.

Now, if you youtube everything, let me know on the comments. Just OK you can if you want to. So this is a case story that you're looking at. Now this couple, you can see here, they are fifty nine and they have three point eight million dollars. Now their graph doesn't looks so good IT looks like it's coming down.

If you're looked on the screen here, it's showing that if they were to spend twenty five thousand month every single month from right now, sixty one when they retire, sixty one and fifty eight, if they both retire in a year, they spent twenty five thousand month every single month for the rest their life, they will pass away right at ninety one. Now let's assume that investments don't do well, just hypothetical. Or they say, you know, we want more of a baLances approach.

Well, now it's not ninety one when they run another money, it's seventy six. So why am I showing you this at all? The reason of showing this is if you want to know how much you can spend, it's not the graph and playing around with right now, this is the graph that looks aesthetically pleasing.

What you want to think about if you want to retire early and spend fifteen or twenty or twenty five thousand month is kid my portfolio support IT. So let's do some really basic math. I'm pulling out my calculator right now.

Let's assume you, anna, spend twenty five thousand dollars a month. great. Well, that's three hundred thousand dollars a year that would allow you to live really comfortable. Ly, all stop until a client you're not going to spend that like what you crazy like, you don't sleep next to me.

Like how could you know what I want to spend? Like you are probably gone to spend more during the first few years or time, then less, then maybe more at the end. They're like, what's your point? I said, well, if you have a dynamic draw strategy, meaning spend more the beginning than a little less, maybe help kid with wedding and you, hey, I can give this property whatever IT is.

Well, now you're in a spot that your plan is to look very different. So this concept that you're just going to spend three hundred thousand every single year for the rest of retirement, it's unrealistic. So what you're gona see me put on now if you're watching on youtube and i'm explain IT, he's called the retirement smile.

This is not done by me. I can invent this, but if you think about a smile, you have what are called your go go years. Your go go years is you and drilling retirement. I want you to be spending, and then you have your slow go years. You're so spending.

But if you're in your seventies or eighties, you're pride not going to be traveling to the same degree then if you no go years where you still want to meet your needs, but you're probably just naturally spending less. So let's assume I just turn that on. Well, what does an average look like? It's not perfect because not everyone is going to be an average spender and retirement, but watch what I just did.

So here's a couple with three point eight million dollars. They were on track for zero. Now they're on track for five point six million at ninety three.

Well, what happened there? What happened is i'm asking my client to be dynamic. And i'm saying when markets do well, I to spend even more than three hundred thousand.

And when markets do poorly, i'm going to ask you to spend a lot less because I want you to optimize your retirement. So I need to think about IT like being a retirement boxer. I put this on the last podcast episode, but sometimes you might need to hear IT again to fully thinking, let's see me.

You're a business owner. okay? Markets doing well, business is is doing well.

You might go higher employees. You might I want to buy a new piece of equipment. You might do a lot of different things.

But let's sing, your business does not do well. Are you still gonna buy equipment and hire twenty employees? Now that doesn't make any sense. So what you're going to do instead is spend a little bit less. I want you to think about your business as your portfolio. Your portfolio is gna have time when he does really well, like this year markets are doing well, then there's going to other years where markets don't do as well.

And I want to ask you to spend a little bit less, not spend three hundred thousand, maybe spent two hundred or two hundred and fifty because if we do another tax tragedy at the same time, IT might yield way more money and that we can lead to these massive differences you're seeing on my screen and that i'm explaining for you. So I know you guys want a nice cookie cutter answer. Hey, I want to spend three hundred thousand dollars year, and i'm looking at a four percent with raw rate.

How much money do I need? Well, three hundred thousand divided by four percent seven and a half million dollars. But i'm showing you a couple that doesn't even have four million dollars that I would say if they wanted to spend twenty five thousand a month, they're in a spot to make that happen.

Not saying they get to go do IT because this takes a lot of work. And we need to make sure that withdraw rate is sustainable, which is what I care about. And if I look at the withdraw right here, look at this seven percent, nine percent, seven percent, six percent.

That's not sustainable. They will run out money. So even though the graph might look good here, this doesn't tell the whole story.

So let's assume this couple says, you know, twenty five thousand months, good, but to be honest, fifteen thousand a months, like hundred and eighty thousand years, that's more than enough. Like I could do everything I wanna deal. Well, they might see their on track for an absurd of of money, twenty thirty million dollars.

And then they go to the withdraw rate and they look at IT and they, okay, what does that say? Well, IT shows its starting at eight percent, which is very high, and then six percent, and then five, then four and then three. And now it's in the now here they are in their seventies with one percent withdraw rate.

Do you know what happens when I have a client? One percent I yell at them just 是 i know but I say， hey, you're not spending enough like I cannot imagine you enjoy your retirement or if you are and you're spending what you want to spend, we you Better be doing some cheerful given or we Better do another tax strategy because if we don't do you know how much money you're gonna and when those require distributions are going to come and walk in the face. So the point here is any type of planning.

If we're looking at tax strategies, for example, let's look at this couple, and i'm not explaining IT as well. If this couple is optimal with their tax strategy, they will generate one point two million more than at the end. They will have saved two and a half million dollars in more in taxes, and they will have ultimately optimized by four million total tax dollars.

So the point as to why I show someone this is because some people get so invested in the taxes they go, this is awesome. I mean, look at this, a million more dollars in taxes, because i'm just smart with my taxes planning. Why would I not do that? And i'll say, oh, you could do that or you could spend more and enjoy your life more or maybe you could do part time in cut or maybe you could determine and it's gona be very difficult for a lot of you.

And I know that to say, hey, maybe I get more massagers in retirement or I go to a different physical therapy that is going to cost more out of pocket, but i'm going to spot to do so. So if you want to start dreaming and understanding what position you're in, of course you can play around with this tool. But ultimately, what I want you to know is this is not a cookie cutter thing.

Okay, let's see me. You want to spend twenty five thousand a month, and you have a pension that covers thousand dollars or you don't need twenty five thousand be generated from some portfolio because you only have ten coming from a pension. You don't need fifteen to be generated from your investments.

Let's assume that you have a home and you're going to downside and it's going to generate two million more dollars. Well, great that I mean, that's available for investment purposes. Let's assume he's surrender annuity.

Let's assume you don't buy long term care. I could do this on and on and on. What I want you to really do in the purpose of this is most of you don't want to spend twenty five thousand months.

I recognized that now, something you are like, no, I do. I just don't have the financial means to do IT. I get that I don't have the financial means to do anything like this. But I want you to know if you're wondering, hey, could I ever possibly truly spend twenty five thousand a month? Just watch this example right here.

Let's assume that just for example say, okay, this couples like, look, I would love to spend thirty thousand a months okay, 这是 hypothetical o thirty thousand a months that three hundred and sixty thousand dollars a year and is a lot of money。 Now I have some clients that live in malaya. I called characters.

Okay, because there are a little odd, you know, nice people, okay, but some of my character clients, like I want to spend thirty thousand a month every month no matter what you say. My god, that's just not realistic. You might have to work way longer and not like I don't care.

I like what I do. So look at this graph me and i'll explain IT as well. Here's a couple, same couple, fifty nine, three point eight million dollars. They are on track to run out of money at seventy seven if they want to spend thirty thousand dollars a year.

But what if you like, I kind like what I do, and I, what if I just did what i'm doing? Now I get, I have to work longer. But what if we worked a few more years? Would that change things? And they're able to run the projection, go away to second, wait a second. So if I work three more years, me four more years each, we are on track for like nine million dollars.

Well, that if that means we could spend thirty thousand dollars a year every single year, that would be really attractive to they might go, you know thirty thousands a lot, but I think it's too much, maybe twenty eight thousand a month, this kind of our sweet spot and then they rerun the customers and go, well, you know, that's awesome, but I don't need thirteen million dollars. Maybe we retire instead, you know, just a little bit earlier and they're able to play around with this tool in a really cool way so they can determine whether their sweet spy, and that's what I want you to really do here. They are spending twenty eight thousand a month.

So twenty eight thousand a month times twelve. guys. That's here's three hundred and thirty six thousand boxy year. Now you can see they're still running out of money at ninety, but they'll go, oh, so what if I work one more year from there?

The reason that one more year helps so much is it's one last year that you're pulling from the portfolio. It's one less year of saving to your foreign kid in adding money to your broker account. So yes, it's powerful to work one more year.

And the biggest mistake I see I begin you not to do this is to go i'm going to wait ah one more bonus oh six more months. How much longer are you going to tell your spouse that because most people come to me going, 哦 yeah， that's me. yeah.

I just keep pushing IT back and I don't like to, but I just don't know, you know, what if markets go down or what if security get reduced or what if inflation goes up? And i'll say test for that. Like like still run the numbers, like only retire when you fully are confident, but don't cheat yourself and just go you know, fifty five and my neighbor is not closer retiring.

So I don't think i'm gonna want to make that happen. Don't do that like really understand the position here and who work with an advisor. I don't care if it's me.

I don't care with another adviser. Just understand the position you're in. Something like point O O O one two percent of people that watch our youtube videos work with me.

So I recognize that most of you watching this video are not going to work with me. Maybe you're going to use the tool that i'm showing you right now. Maybe you're going to keep listening to the podcast and go, hey, that's good enough for me.

I get my education here. I don't know what you're gonna al, but I want to help you regardless of where you're at in your journey. So if you don't have three, four million bucks, you're gonna one day and you're gonna to know how much income that can support, use a tool like this and understand how you can start optimizing and go on.

Okay, this makes sense. Oh, maybe I switch this trade often really get a good sense. Don't over optimize, which I see people do with, you know what of markets drop by ninety percent and the security is never there.

It's hey, let's not be unrealistic with this. Let's just should be conservative as we look at planning. So hopefully this video k study pod gas was helpful. And if so, please subscribe like this video and share IT if you want access to the tool i'm showing right now or you want to work with my team, you can see in the description of this video and podcast, or you can go to do just that. Thanks, guys.

Thank you for listen to another epo de of the early retirement show. If you have a question that you want answered in a future episode, you can always go to my website, early retirement podcast 的 com， that's early retirement podcast dot com, and you can go head and made a question that all look to answer in a future episode. Thank you for listening.

Please do read and review IT and share IT with someone who you think I would benefit from this information. If there's anyone out there that you know, I certainly appreciate you and I will see you all each week. Hey guys at me again, please be smart about this.

Nothing in this podcast should be construed as financial tax or illegal advice. Consult with your tax prepare or financial advisor before taking any action. This podcast is for informational purposes only.