How Much Can You Spend in Retirement? A Surprising Answer

In this video, Kevin addresses a common question: 'How much money can I spend in retirement?' He introduces a dynamic income strategy for planning retirement spending and walks through a case study with a couple, Jim and Pam, who have $2 million in assets. Kevin covers their financial situation, including assets, social security, and expenses, and uses software to model out their retirement plan. He evaluates the impact of potential market downturns and various spending strategies, ultimately revealing how much Jim and Pam can spend.

00:00 Introduction: How Much Can You Spend in Retirement?
01:57 Meet Jim and Pam: A Retirement Case Study
02:35 Analyzing Assets and Income Sources
03:56 Expenses and Spending Goals
05:21 Cash Flow and Tax Planning
08:39 Roth Conversions and Tax Strategies
10:55 Spending Capacity and Market Scenarios
16:29 Stress Testing the Retirement Plan
18:39 Conclusion and Final Thoughts

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*ABOUT ME*

I’ve always been passionate about personal finance, investing, real estate, and helping people find the freedom to live their life with purpose. But when my dad died in 2015, I tried to help my Mom find an advisor to sort out her finances. Instead of a helping hand, I found an industry of financial advisors dominated by glorified salespeople working on commission — pushing products that were not in my mother’s best interest. Or advisors with minimums that shut-out all but the ultra wealthy. Disappointed with the options, I took matters into my own hands and launched Foundry Financial, a wealth management firm with transparent pricing that specializes in helping provide clarity around money — so you have the confidence to make smart decisions.My goal is to help a million people retire without worry!

📅 *THE BASICS OF RETIREMENT PLANNING*

Retirement planning has several steps, with the end goal of having enough money to quit working and do whatever you want. Our goal is to help people master retirement and retire without worry.

Step 1: Know when to start retirement planning. When should you start retirement planning? The earlier you start planning, the more time your money has to grow. That said, it’s never too late to start retirement planning. Even if you haven’t so much as considered retirement, don’t feel like your ship has sailed. Every dollar you can save now will be much appreciated later. Strategically investing could mean you won't be playing catch-up for long.

Step 2: Figure out how much money you need to retire, The amount of money you need to retire is a function of your current income and expenses, and how you think those expenses will change in retirement.

Step 3: Prioritize your financial goals. Retirement is probably not your only savings goal. Lots of people have financial goals they feel are more pressing, such as paying down credit card or student loan debt or building up an emergency fund.Generally, you should aim to save for retirement at the same time you're building your emergency fund — especially if you have an employer retirement plan that matches any portion of your contributions.

Step 4: Choose the best retirement plan for youA cornerstone of retirement planning is determining not only how much to save, but also asset allocation. It can make a massive difference in your retirement plan.

Step 5: Select your retirement investments. Retirement accounts provide access to a range of investments, including stocks, bonds and mutual funds. Determining the right mix of investments depends on how long you have until you need the money and how comfortable you are with risk. It’s often helpful to talk with an adviser to discover the right mix of stocks and bonds.

❣ *SPONSORED* No, this video was not sponsored.

⚠️ "DISCLAIMER:⚠️This is not financial or investment advice. This Channel is meant for EDUCATIONAL AND ENTERTAINMENT PURPOSE only. None of this is meant to be construed as investment advice, it's for entertainment purposes only. #retirementplanning #retirement #passiveincome

[jfedyk]

This is much better than the standard 4% stuff you hear about. The key is the dynamic approach to spending. That seems to be very practical tactic.

[RamonaDahl]

Wow, this video is incredibly helpful! Kevin's breakdown of Jim and Pam's retirement plan is so clear and easy to follow. I love how he uses software to model different scenarios, especially considering market downturns. The tips on tax planning and Roth conversions are gold! Definitely sharing this with my parents as they plan their retirement. Thanks, Kevin!

[lindsaynewell]

2:15 I love that Kevin couldn’t help but smirk while introducing Jim and Pam. IYKYK 😂 I like the dynamic income approach.

[Sjc]

Please clarify the following statement on your website: "We do not offer hourly work, but we do offer a very limited number of one-time retirement plans beginning at $5, 00.00. We are unable to offer a free assessment to people not interested in a long term engagement." I can't decipher whether $5, 00.00 is $500 or $5, 000.

[Faben]

I love these scenarios, Kevin. Thanks for taking the time to put them together. I was wondering if you could do a similar “how much can they spend” with a combined total of $3M at age 57. This would be between IRA’s, 401ks, and some taxable brokerage.

[michellemybelle]

I would have loved to see this without the legacy goal! Great video

[randolphh]

Variable spending is both a good plan and a necessary plan.
We are retired 2 and 4 years. Our income needs are literally different in almost every year through the first 10, and only later are expected to be more consistent. We also have determined our necessary spending versus our desired discretionary spending that our portfolio should support, and the difference is about 40%. Having a 40% cushion pretty much eliminates all major risk other than health and death! (Which are of course the more significant and unpredictable risks in retirement)

[tomironman]

This is by the best video about retirement, with such useful guidance on tax liabilities, spending plans and financial market scenarios. I’m planning to retire in two years and want to make plans for it. I really like to use your retirement planning tool - how can I get started?

[Eric-Marsh]

It would be fun to play around with this software just to do a look see. $1k a month seems low for international travel. We're budget travelers living in Europe. In general I calculate 300 Euro a day for expenses. We just got back from Iceland and did Antartica last year and they were significantly more than that.

[jamesmarsh]

Great informational video. Appreciate your insight.

[jimsmith]

I have a 150K annual retirement income. But 100K is royalty based, and it fluctuates a lot. 30K is from a 401K and it fluctuates a lot. The last 20K is social security. Even though my expenses are 100K, I feel I have to have a wide cushion because of my income variance. I am a bit paranoid about spending.

[oktmtsg]

Thanks, Jim! I now feel more confident about my retirement plan. I am 62 and plan to retire in 3 months. Between me and my husband, we currently have about $3.5M in our 401ks (excluding IRAs and ROTH) and no debts (our house and cars are all paid off). Our withdrawal rate from 401k would be 2% annually (since we will have about $100k-120k portfolio income annually from our taxable brokerage accounts). We plan to travel around the world during the first 10 years of our retirement, then settle down in the States thereafter... Our budget for retirement spending is about $12k (can increase if needed) monthly pre-tax (we live in TX)... Given the spending scenarios, hopefully we can afford the retirement we've envisioned?

[swright]

Great content. I wish you and every other financial planner would disclose your fees on these videos. This is a subtle sales pitch. Let's be honest. Your website does not dislose your fees either.

[MerryHampton]

not sure how many years you planned for their retirement - 20 or 30?
love the analysis

[jameschaves]

Let’s address the elephant in the room!! With that size of assets what would they be paying you? Or any CFP?

[barbaramain]

What about a young widow whose spoused died at 52? I have not seen any models discussing this scenario.

[arnoldjohnson]

This sounds crazy, they die with a million dollars in the bank and a million dollar house. People worry too much about leaving millions to their kids.

[emiliocunich]

Can we keep adding to a Roth Ira once retired? With income not coming from work but from pension, social and or 401k and or taxable accounts

[johnkleinhenz]

Great video
Are you a certain type of Financial Adviser?

My current FA has never presented this type of analysis

Do you provide this level of detail to all your clients?

I am 63 Wife is 66
NW $2.6
Liquid $1.6 - 401k / IRA

[Steve_SEC]

It would have been helpful to see their investments