How much do I need to retire
comfortably?
Have you ever asked yourself
that question?
This question affects every
single one of us because we
all want to retire one day.
But how do we do that
comfortably?
That is exactly what we are
going to dive into in today's
video.
A lot of us can have a hard
time deciding how much to save
and invest in order to retire
comfortably.
So let's talk about exactly
how to do this,
and I'm going to share the
steps that I took to be able
to retire comfortably.
The first thing to consider is
your retirement lifestyle.
What type of lifestyle do you
want to be living during your
retirement years?
Because the amount of money
you need to retire is going to
be dependent upon that
lifestyle.
Do you want to travel
frequently?
Do you want to have a huge
mansion on the hill,
or do you want to just have a
simple home somewhere in the
valley and take a small
vacation every year?
It is up to you.
So you need to decide what
type of lifestyle do you
really want because it's going
to play a significant role in
determining your retirement
needs.
And for me personally,
I don't need that mansion in
Malibu.
I just like a comfortable home
that I can have people come
over,
we can hang out and watch a
movie maybe,
or do something outside in the
backyard,
things like that.
I don't need something really
extravagant.
So my needs for retirement are
not that extreme.
And yes,
I do want to be taking
vacations,
but I don't need to be
traveling on a private jet
going to the Caribbean all of
the time.
I can take smaller vacations
here and there,
and I can also travel
internationally,
but I don't need to do it on a
private jet.
And then the second thing to
look at is your current income
and your current expenses,
and then think about how that
is going to change in your
retirement years.
Of course,
our expenses will change over
time.
We will get rid of certain
expenses,
perhaps a mortgage payment
because our house will be paid
off or a car payment because
that will be paid off as well.
But our medical expenses could
be going up later in life.
And experts suggest taking 70
to 80% of your current
expenses,
and that would be the expenses
you would need in your
retirement years,
but decide what is going to
work best for you.
Because if you are retiring
early,
your expenses might be pretty
similar to what they are now.
And one way that I like to
easily track my expenses and
my income is by using a free
app.
It used to be called Personal
Capital.
It is now called Empower.
You can hook all of your
financial accounts to empower
and you can see your full
financial picture in one
place.
So you can see all of your
expenses that you have right
now.
And then you can determine,
okay,
am I still going to be
spending a similar amount of
money in the future?
If that is something you're
interested in,
I will leave my referral link
below in the description.
You can click on that and set
up a free Empower account.
The third thing to consider is
your retirement age.
When do you want to actually
retire?
I know for me,
I clearly wanted to retire
earlier than normal.
A lot of people retire in
their sixties,
but there is a big movement
out there,
maybe you've heard of it.
It's called the fire movement.
Financial independence retire
early,
and a lot of people are
retiring in their thirties and
forties and fifties,
so a lot earlier than the
typical retirement age.
Determine when you want to
retire because that is going
to affect how much money you
are going to need to invest
and save right now.
And then the fourth thing to
take into consideration is
inflation.
We've seen really high
inflation rates recently,
but that probably won't stick
around forever.
But you do want to be aware
that costs are going to go up
over time.
So we can't just stick to a
flat amount and not adjust for
inflation because the amount
of money you will need to live
off of in retirement is going
to be higher than if you were
to retire today just because
of inflation.
And the way I figured out how
much money I would need to
retire is by using the 4%
rule.
And I do cover this in more
detail in another video.
I will leave a link to that
above.
You can check it out later on.
You're going to take your
yearly expenses that you'll
have in your retirement years
and multiply that number by
the number 25.
And that is going to be the
amount you are going to need
to have invested,
not just saved but invested to
retire and live comfortably.
For example,
if your annual expenses are
$40,000,
if you multiply that by the
number 25,
you're going to get a million
dollars.
You would need a million
dollars invested in order to
retire and live comfortably.
And that number is adjusted
for inflation.
Comment below and tell me if
you know your retirement
number or your financial
freedom number already.
And then the fifth item to
consider is social security.
And this is not a guarantee,
but it is something that you
can add into your retirement
numbers when you are figuring
those out.
But just realize that it may
not all be there.
Social security depends on how
much money you have paid into
social security over your
working years.
And you can actually create a
free account if you haven't
already on the social security
website.
And it will give you an
estimate on what your social
security amount would be in
retirement years.
And just remember not to count
on this money,
but it is fun to log in there
and see what the estimate
would be.
And then the sixth thing to
consider when you are asking
yourself,
how much do I need to retire
comfortably is what are you
you investing in right now?
Do you have retirement
accounts set up or even
non-retirement accounts set up
that you can invest your money
in and are you actually
investing that money?
And I wanna be clear on this
because sometimes people set
up those accounts,
but they don't actually invest
that money in the stock
market.
It's just sitting in the
account and not being invested
in some type of index fund
inside of the stock market.
Make sure and double check
your accounts that you have
your money invested in the
stock market and not just have
your account set up and cash
sitting in there.
It is nice if you have a nine
to five job and your employer
offers a 401K with a match,
then you can at least invest
in your 401k up to that match
and start getting some free
money that way.
And of course,
you can also set up investment
accounts on your own.
You can set up a Roth IRA or a
traditional IRA depending on
your situation,
or you can even set up a
brokerage account.
And if you want more
information about what a
brokerage account is,
I do have a video breaking
this down and the benefits of
having a brokerage account,
I will leave a link to that
above.
But I wanted to share really
quickly that I am really glad
that I set up a brokerage
account.
I also have a Roth IRA and a
traditional ira.
But what I did when I was
purchasing my fourth property,
I was able to take money out
of my brokerage account and my
Roth IRA because you can take
out your contributions tax
free and penalty free.
But I took money out of my
investment accounts and put
that toward my down payment on
that property.
That money had grown so much
in the stock market over just
the few years I had it in
there that I had a significant
amount in there.
I still left some money in
there and then I took some out
for my down payment on my
property.
When you are investing in
certain types of accounts,
it doesn't mean that you have
to leave your money in there
until age 59 and a half.
You can actually pull that
money out earlier.
And yes,
there are taxes that you will
pay depending on which account
it is,
and you wanna be careful not
to take out money that is
going to have a penalty.
But there is some flexibility
there.
And if you are wondering about
the differences between a Roth
IRA and a traditional ira,
I also have a video on that.
I'll leave a link above.
And for me,
I'm glad I did not just stick
to a 401K plan and invest only
in that.
I'm glad I set up my other
accounts,
my Roth IRA and my brokerage
account and put money in those
accounts because honestly,
just by having a 401K that may
not get you to retirement when
you want to be retired,
the more money we can invest
even earlier,
the better off we are going to
be because we will be able to
retire even earlier.
And retiring earlier may not
mean that you're retiring
before typical retirement age,
but it could mean you get to
retire in your sixties.
Just depending on your
situation.
You wanna make sure you are
investing as much as possible
as soon as possible.
And if this is something you
want help with,
I do have a free masterclass.
I will leave a link below in
the description and you can
click on that and check out my
masterclass.
And then the seventh thing
that we want to take into
consideration when we are
figuring out how to retire
comfortably is knowing how to
withdraw our money from our
investment accounts when we
are ready.
We don't wanna run out of
money too soon,
but we don't wanna have too
much money in there that we
aren't having any fun in our
retirement years.
Like I mentioned before,
I like following the 4% rule,
which means you can withdraw
4% of your investments every
single year adjusted for
inflation and be able to live
comfortably and know that your
money is going to last.
Comment below and tell me one
thing you are going to do to
make sure that you are able to
retire comfortably when you
want to.
And if you found this video
helpful,
please hit that like button
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Thanks so much for watching.
I'll see you in the next
video.