How Much Do I Need to Spend $10k/month in Retirement?

Planning for retirement can be daunting, filled with anxiety about having enough money. John and Jane, a couple like many of you, transformed their retirement fears into a secure future, living on $10,000 per month. Here's how they did it.

Facing Retirement Anxiety:
John and Jane feared running out of money in retirement, influenced by their parents' struggles. Determined to avoid this, they aimed to either enjoy retirement or live frugally but worried about overspending or missing out.

Before planning, their finances included:
-John's 401(k): $1,000,000
-Jane's 401(k): $700,000
-Joint Investment Account: $320,000
-Home with a mortgage balance.

They assumed a 7.2% annual growth rate pre-retirement and 6.5% during retirement to guide their plan.

Setting Retirement Goals:
At ages 62 and 60, they aimed to retire at 67 and 65, spending $10,000 monthly. John planned to delay Social Security until 70 for $3,900/month, while Jane would collect at 67 for $3,100/month. They both contributed 10% of their salaries to their 401(k)s, with a 3% company match.

Cash Flow and Expenses:
In retirement, income would shift to Social Security and investment withdrawals. They ensured their portfolio could sustain their lifestyle, adjusting for inflation.

Mortgage and Tax Strategies:
Their mortgage, with three years of payments left, was factored into their plan. Effective tax planning, including Roth conversions and charitable giving, helped minimize liabilities.

Withdrawal Rates and Portfolio Sustainability:
An initial withdrawal rate of 4.5% would drop to 1.5% once both received Social Security. Their portfolio was projected to grow, ensuring sustainability.

Exploring Enhanced Spending:
They explored higher spending scenarios up to $14,000/month, maintaining a comfortable margin for enhanced spending.

Finalizing the Plan:
John and Jane decided to retire at 65 and 63, allowing $11,000 in monthly spending. They optimized investments, tax strategies, and ensured proper insurance and estate plans.

John and Jane's journey shows the power of comprehensive planning, providing peace of mind and financial security for a comfortable retirement.

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⏱Timestamps:⏱
0:00 - John and Jane
2:09 - Goals and income
3:59 - Cash flows
6:12 - Making a tax plan
7:30 - Portfolio withdrawals and analysis
9:58 - Optimizing success
12:14 - Takeaways
13:39 - Considering possibilities

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Видео How Much Do I Need to Spend $10k/month in Retirement? канала James Conole, CFP®