Take These 3 Simple Steps to Know When You Can Retire

It can seem overwhelming when it comes to calculating whether or not you're in a position to retire.

In today's video you'll learn how to never run out of money. Social Security, Income, Taxes, Investments, etc.

These three numbers will tell you if you're in a strong position to retire, or whether or not there are strategies you can implement to help you get there.

00:00 - Introduction
:58 - Rules of Thumb Don't Apply
3:00 - Know Your Expenses
5:16 - Non-Portfolio Income Sources
7:26 - Portfolio Goal
8:51 - Arbitrary Number
10:00 - Working With Us

Learn the tips & strategies to get the most out of life with your money.

_ _

For more resources and content, check us out below!

Other videos we think you'll like:

[Wiltshire-observer]

What I found worked best, is trying living on half of your employment income for five years before you decide to retire. If your pension income is the same amount, you can cope + 30% in your budget for extras, such holidays or home repairs. It worked for me.

[randolphh]

Good suggestions, but an approach that has worked well for us(retired one year ago)is to figure our base expenses with no frills. We looked at the checkbook, bank statements, and the credit card statements(always paid off) to get the data. Then looked at a budget with a bit of discretionary income for travel and food, and another budget with what we would like at the most.
We have found that our spending is quite different in retirement.
Ironically we got a taste of this during COVID.
Much more food at home, no need to buy clothes, less car expenses(able to downsize). We are able to travel MUCH cheaper, eat out less and cheaper, lots of senior discounts and don’t travel at peak times. We quit buying “stuff”.
So our base budget is almost half of our previous take home. we are now adding in travel and such as seems reasonable.
We have some base income and spending down some portfolio to get a larger SS check. We think that our base SS income will be about $6000 per month which more than covers our base expenses. So the portfolio will then just be for fun and old age.
Creating a scenario where money is not a substantial worry is priceless.
BTW no debt is the foundation!

[julieg.]

A really excellent discussion today, James! I’m using New Retirement’s software to capture all our expenses, asset and income accounts—it’s so helpful! I’m 61 and will be retiring summer of 2026 with confidence thanks to YouTubers like you and Ari, and New Retirement 😊

[lindadorman]

The problem is certain expenses in retirement will be incalculable such as healthcare, assisted living and long-term care. Travel is optional but these are not and that scares most people they will not have enough money.

[TheJAXguy]

We are retired and we do quite a bit of traveling. Traveling is not cheap, and if you wish to travel a decent amount in retirement, you will have to be realistic with the costs and funding.. Our travel budget is about $40, 000 + a year, which is pretty generous. Nonetheless, when you are on the road and doing stuff, the money goes quickly. And we are careful how we spend.

[conggao]

Glad to find your channel, watching them, currently no debt and working towards FIRE in next 10-15yrs

[mediterraneanworld]

Regarding travel in retirement - I am so glad to have traveled extensively by the time I was 40 as now the reasons for travel are very different - it is too bad that people have to wait their whole lives to enjoy these things - especially since travel only becomes more difficult with time irrespective of means due to health and family issues.

[johnmcvay]

Your stuff is brilliant. I’m a practicing CFP but hearing you break down a real world case is just great. It’s great hearing the reiteration of what I already know but it’s also great hearing your wording/phrasing. You have a gift simplifying complex concepts that I use often with my clients. So thank you !

[bendilla]

Thanks for the great content, and for helping us understand and navigate the road to retirement

[rdgale]

You always deliver great information. I like this format of video over your first set of videos. It is a much more casual setting. Makes me feel more at home.

[gnoekus]

James, thanks for your expert advice, analysis, sharing, loving all your videos. Could you please do a video on retiring without leaving much or leaving as little as one can - for singles? I understand it's hard to know when we will retire until, but all calculations are assuming one wishes to leave money behind, and no formula or analysis or info on retiring by also depleting one's portfolio - if you know what I mean. Let's say depleting in 20-25 years for a 55-60 year old. THANKS ~

[davidfolts]

Nice graphics, James. Adds value to your outstanding content!

[jimclark]

This was great 👍, saved to review with my wife. Our numbers get bit wonky with early retirement.... my wife is 63 and retired, will start social security in 3 years we think. I'm 59 and expect to retire mid 2023. So we need to bridge to social security, have enough cash equivalents for the 3 years before wife gets her soc sec, but will use a combo of part time work and portfolio money for the 5 or 6 years before I start. What I see is the trickiest part will be balancing part time income, Roth conversions and ACA subsidies. Also fear or bad markets and taxes keeping us from enjoying our healthy go go years, plenty of obituaries of people who just wanted to work one more year to save a little more!

[laurasamaniego]

Great content! It does help me figure out my retirement number. Thank you so much for sharing your knowledge.

[steverowe]

I have been retired for 11 years. Forecasting the future is a difficult proposition at best and your approach is overly simplistic for a variety of reasons. You did not cover inflation impacts which are significant especially in recent years. You also need to consider health insurance costs which can increase significantly when you retire. My employer offered retiree health insurance benefits at a group rate but I was responsible for premiums that my employer previously paid. Additionally, in the year after I retired, my employer changed the plan and grouped all retirees in a separate group from active employees so behold, health insurance premiums went up. They also unexpectedly changed again the year I started on Medicare which increased my costs yet again. The bottom line is that employers can change retiree benefits on a whim so be prepared for the worst.

If you really want to know if you can retire or not, try living on your expected retirement income for at least 1 year before you retire saving any excess income. Monitor closely any draws you make on your savings to see any shortfalls. This was the best confidence indicator to me to determine if I had enough saved for retirement and it worked.

[dc]

Got to be honest...retirement doesn't sound like what it's cracked up to be. Work, and save, and invest all my working life, then retire. Only to confine myself to a strick budget. I understand about making the $$ last, but it really seems like trading one pair of handcuffs for another.

[brahmmauer]

I bet that a large majority of people retire and still have either a rent payment or a mortgage payment.

[urbanart]

If I live overseas I will reduce my car expenses, car insurance and pay less for internet and cellphone for which American pay too much

[dforrest]

Depending on where your funds come from, your taxes could be much less in retirement. If you’re using long term capital gains, dividends, or funds from anything but a tax deferred account, your tax rate should go down a lot.

[dash]

I watched your videos, I did not get this 4% rule. To know size of portfolio needed, why you divide the amount by 4% ? why not any other number?