Retire with 5,000 a Month?!

Reacting to: @Briannazfinance

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Be careful of scammers. In the comments section, I will NEVER ask you to contact me, offer any investment products, recommend a stock broker, or anything similar. Some scam bot commenters 'ask' for investment help, and later, other comment bots reply with "how great X idea/investment/person is" in the replies. These are scam threads. Do not fall for them.

🚨 Azul's VIDEOS ARE NOT FINANCIAL ADVICE (Disclaimer) 🚨

The decisions on how to invest, when to retire, and other financial planning topics are some of the most important financial decisions you will make in your life. I urge you to seek professional financial advice as you make this decision. Ideally, from a financial adviser, AND a CPA AND an attorney. Having the perspective of all three professions will help you make the right decision for you and your family.

This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and may NOT be suitable for all investors.

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Spoiler Alert: There are no "get rich" programs. Rather, just basic blocking & tackling and putting in time and care. Do your homework, choose wisely and (IMHO) work with experienced professionals who are fiduciary to you 100% of the time.

[StaceySouth-ev]

Is anyone else terrified about the retirement crisis in America? Half the country has no savings, and Social Security might not cover basics. How do you even start planning when everything feels stacked against you?

[liviuion]

This whole retirement thing is stressing me out. I used to think saving a lump sum was enough, but now I’m realizing I might be way off. The idea of running out of money later in life is terrifying.

[Brad-eyhb]

I got caught thinking there would be an answer.

[Bkamaclean]

Many of us don't make $5000 a month even when we are working...

[scottjackson]

These numbers mean NOTHING, unless you go to the trouble of specifying whether the $5, 000 per month means “gross” (i.e., before taxes are accounted for) or “net” (i.e., the spendable amount that you have left over after you’ve multiplied the $5, 000 by .78, or whatever decimal figure represents your marginal federal tax rate). The failure to distinguish, EXPLICITLY, between these different amounts (amount types) in online calculators and “expert” analyses drives me nuts.

[kathleendudek]

$5000 times 12 = $60, 000. So, 1 and a half million at 4%. Or, 1 million at 4% + Social Security.

[Sanchyfab]

True, if you're depending on Social Security alone, you're looking at a much smaller monthly income

[doontoonkc]

Azul, would you please offer a series of financial advice to the working class. People who make under $50, 000 a year. I made $10, 000 - $30, 000 the majority of my life. I'll be living on $1, 400 a month Social Security. There are thousands of people like me that will be living/struggling on Social Security alone. No pensions. Not much in savings. Some of us will be able to hopefully work part-time depending on our physical health, but for how many years? All the financial advisors on YouTube are giving advice to people who are wealthy and they probably don't need the advice, they will be financially fine. The working class people need the financial advice more than the rich.

[Frank-James]

You don't need guaranteed returns. I am a retired federal employee and the TSP's C Fund has been averaging 11.9% since its inception. Almost 40 years. It mirrors the S&P 500 so a good S&P fund will do the same. Invest in your TSP/401K/IRA whatever from a young age and you will easily have a few million when you are 60. It's a shame we don't teach this to our children in school. They're financially illiterate when they graduate high school.

[Very_Concerned-Citizen]

If it is an annuity product, no problem with no residual value if you are not concerned about a legacy. A bigger concern: Most annuities in that ROC range (>8%) are not inflation indexed. That means in 30 years you will still be getting $5, 000, not $14, 000

[thehowards]

Thank you, azul. Your look at things is always refreshingly realistic.

[redicue]

I make $5200 with pension and SS. I live in CA in a 4 bed 3.1 bath house and I still have $1000 left over for discretionary spending. I do have a low mortgage at 2.75% so that helps.

[BF-kfxz]

Her comment about 3.5% inflation seems steep. Then realized it got crazier from there...

[miketony]

Between my wife and I, we get $5300.a month from social security. I also still work and earn around another $1300. a month from self-employment. We are both 70 years old.

[TheCoppergoat]

You're gonna need around $1.5 million in a investment account to make about $5, 000.00 a month

[thomasreedy]

A bit confused.

You need to know how much you need when you retire. So you need to estimate inflation to determine that value.

If she is retiring in 30 years, needs 5k a month now then she will need to estimate how much she needs in 30 years. The closer you get to retirement the more likely your current expenses matches your retirement expenses.

Once you have reached your FI number, you need withdrawal rate + inflation to be equal or less than your investment returns.

So if inflation is approximately 2.5% and investment returns are 6% you can take out 3.5% without having to worry about depleting assets.

However, we don’t live forever so you may be able to get away with a 4-5% withdrawal rate so you run out of money close to death.

At today’s valuation you need 1-1.6 million to sustain 5k a month with 75% stocks and about a 30 year death date.

[javaskull]

Since I don’t have heirs to leave anything to, putting part of my retirement savings into a single life annuity (plain vanilla, very low commission) makes sense. It gives me a higher annual income stream than I could realize by drawing down the recommended 3% or 4%. And since it came from a Roth account into a Roth account, that income isn’t taxable. I would not put my whole nest egg into that, but I put 25% in.

[gibblespascack]

I did this calculation with my lump sum pension that I have grown out for the past 10 years(it has doubled twice). So now it is at 900K and if I took out 5000/mo and increased that by 4% inflation per year, the fund would last about 21 years with a investment return rate of 8%. The issue is the growth rate of the 4% year on year inflation estimation which gets the payout up to ~170K/yr at year 21 which destroys the fund and growth and principle. Running this myself would be an issue for me if I started next year when I turned 60.(My minimum house budget currently is 38K per year with health care included.)

[ryanra]

Buddy 8% is really doable. That is the average return in the stock market over the past 50
Years

[privateprivate]

I’m glad both of them are talking about savings, in terms of what may be tomorrow. Because there are a lot of people who feel they are set, with what costs are today. As we’ve seen with hyperinflation, that could change quickly. I am almost 60 and still working. My paycheck isn’t what it was worth, when I was hired, 7 years ago. So, when I’m handed that yearly cost of living raise, my smile is fake, because just what am I supposed to be jumping for joy for? Falling further behind?