Month: February 2023
Retirement Planning Timeline
Harvey 0 Comments Planning your Retirement
Hi everyone the lesson here for money evolution calm in today's video I'm going to be talking about the retirement planning timeline and some of the key ages and milestones that you might want to think about in terms of your financial planning and getting ready for retirement so let's start all the way over here on the left at age 50 is what we call where the serious retirement planning phase begin so that's the age where oftentimes people may have gone through a major transition maybe your kids have moved out of the house maybe your cash flow is starting to improve because maybe you paid some debts off or your house off or you're just starting to think about hey if we want to retire in 5 or 10 years what do we need to do to make that happen and what are some of the planning steps so 50 is the serious planning phase begins age 55 is another key milestone then not a lot of people are aware of but that's the age where if you get to that age and you've retired on or after your 55th birthday you can take penalty-free withdrawals from your 401k plan so that's a question we get a lot where somebody wants to retire 57 or 58 and they want to start taking some withdrawals but they don't know how to do it well if as you keep the money in your 401k plan you can take those penalty-free as long as you separate after age 55 59 and a half is what we call the normal retirement age that's where you can start taking penalty-free withdrawals from all of your retirement accounts 401ks and IRAs so that's the magic age that the IRS has put on us 62 is the age when you're eligible for Social Security benefits as an early collector so that's the earliest that you're eligible for your Social Security benefits 65 is the age where Medicare kicks in so that's another important milestone for many of you watching this you may want to retire prior to age 65 unfortunately before age 65 you're going to either have to hopefully have some insurance provided by your former employer or you're gonna have to go out into the exchanges and buy that insurance on your own that's something we talked about and some of our other videos there but 65 things get a little bit better you get on Medicare age 67 is what we call the full retirement what Social Security ministration calls your full retirement age so that's where you get unreduced Social Security benefits and then at age 70 is the latest that you can delay collecting Social Security so if you wait past your 67th birthday you're going to get about an 8% increase for every year that you wait but you can wait past that 70 but doesn't make sense to you're not going to get any additional benefit by waiting past age 70 and then 70 and a half is where whether you have a retirement withdrawal strategy or not the IRS has one for you and it's called the required minimum distribution rules or RMDs and that's basically if you have money in traditional retirement accounts the IRS has said hey you've gone long enough without taking it in this money out you need to start taking withdrawals and start paying some of the taxes on that money so all of this here that we're looking at if you think about how your income and expenses work while you're still working they're gonna be you know pretty consistent you've got some income coming in you've got some expenses hopefully you've got some cash flow leftover at the end hopefully you're saving some of that additional cash flow but then once retirement kicks in let's say you retired at age 57 well you might not have any income coming in or maybe you have a small pension or a big pension coming in but you're not even eligible for example to get Social Security benefits you may have higher expenses because you're paying healthcare premiums out in the exchanges so at age 62 if you take Social Security benefits maybe that kicks your income up maybe your expenses go down once Medicare kicks since there's a lot of this variability that's going on so one of the things that we want to understand as we're going through this retirement timeline is we want to understand a couple of things we understand what is our income today and more importantly or more specifically we want to know what is your tax rate today because that's going to be very important for us in determining what that future withdraw strategy is going to be and maybe how or where we save that money while we're still working so that's very important versus that tax rate out here in retirement the other thing we want to understand is what we call your retirement gap and everybody pretty much has a retirement gap that's why you say money for retirement so that you can start to take some withdrawals from your portfolio but understanding that gap is going to tell you or us how much money you might need to take from those retirement accounts it's also going to factor into the more money you have to take out the higher that tax rate is going to be so we're going to start to learn a little bit about what those tax rates are going to be throughout retirement and one of the things that we notice is generally from the time somebody retires to maybe age 62 or maybe even all the way to age 67 if you delay taking Social Security these are what we call the low tax years for many people and that that gives us some opportunity to do a couple of things number one it gives us a strategy for taking withdrawals because in these low tax years if we're in a lower effective tax rate we can take more money out of those retirement accounts and do it at a reduced tax rate we also can look at doing something called a Roth conversion and so basically what that is is saying okay we've got some money in a traditional retirement account and hopefully if that money grows between now and age 70 and a half those accounts can sometimes grow fairly large which means that at age 70 and a half if you haven't done anything preemptively before then you could end up in a potentially really high tax bracket so by doing a Roth conversion and taking advantage some of these low tax years kind of preempts that a little bit and as allows you to kind of spread that income out over a longer time period so having some really low tax years here and some really high tax years there we can kind of spread that out and keep hopefully things at a lower tax rate throughout retirement so those are some of the planning strategies that we do the other factor that goes into play here on having higher taxes is that also is going to affect your Medicare premiums so Medicare premiums if you don't know already is tied to the amount of income that you made from actually the prior two years ago basically and higher that income is the higher the Medicare premiums are going to be and sometimes that could be substantial as well so by keeping that income a little bit more consistent hopefully can maybe keep your Medicare premiums a little bit lower as well so these all of some of the planning strategies that go into it the last thing I want to talk about here is in looking at some of these low tax years the potential RMDs we want to look at where are you contributing money while you're still working and oftentimes what we see a lot is that people have put the majority of their money in traditional retirement accounts those are monies that they get an immediate tax benefit today because it comes off of your income and that's what people like but again what that might be doing is putting them in a position where they're paying more taxes in the future so for a lot of people you might want to consider look at making Roth contributions while you're still working and balance that out a little bit because that's going to be a situation where you're not getting any tax benefit today but you can take tax-free withdrawals in retirement so it gives you a little bit of a balance there so hope this has been helpful hope this is helped make some sense on some of the things you should be looking at at these different ages this is something we do all the time with our clients and we do this through our wealth vision comprehensive financial plan of course we get into a lot more detail a lot more information about the tax rates and some of these strategies here
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Read MoreHow To Become Rich With No Money
Harvey 0 Comments Retire Wealthy & Wise
So you want to become rich without any money? haha! you can totally do that! It's awesome. I know because I did. Kris Krohn here with Limitless TV and we're going to be talking about different ways of creating wealth. I'll even give you one of my favorite proven systems of exactly how I did it. So if you got no money and you want to become wealthy, if you want to become rich there's two different ways. Two different approaches you can do. You can either use a proven method or you can be the creator of a method. And I want you to understand the risk between both of these concepts. If you leverage a proven method, this is what I did and I'll share with you what I did. Or the difference of actually creating something novel like, like think of the guy that started Facebook right? I mean he created this really amazing idea now he's a multi-billionaire. By far, the safest way to become wealthy is to already leverage proven paths. That may not be your path. You may be, you may feel called the pioneer something different in something new. For me personally, my whole story in life began on my journey to creating wealth to leveraging proven existing systems. And this is coming from a place where I was $8,700 in debt.
I didn't, wasn't making enough money at my job to actually cover and pay all of my bills. The thing that made the difference was getting a mentor based on a proven path. There were three men that I worked with all of which had made over ten million dollars and these individuals all made their money through real estate investing. This is something anyone can do. In fact, the first fourteen months of being mentored I didn't buy a property and I wasn't making any money but I was following their system in their path of developing credit putting a little money in savings, penny-pinching.
It ultimately put me in a position to buy my first house. In my first house when people came over the for the for the for the housewarming party, what they didn't realize was this wasn't going to be my house very long. I really was renting out the basement it was covering my whole mortgage and I bought the house with $40,000 of equity. So the house was an investment and that house bought my second house and the equity in those homes bought my third house and with with no money, other than 14 months of saving five thousand dollars, thirty five hundred which I used to buy this house, same strategies existing in our world today. Those homes became 50 homes, became a hundred homes, became hundreds of homes, and I built all of that without any money out of my own pocket but I did it through working with mentors that knew a proven system and a proven path. And in this next video segment, I want to really share with you exactly how I did that because if you want to create wealth for nothing, you're going to need to take the right advice, stick to the plan, and execute it like I'm about to show you.
I'm going to show you exactly how I became wealthy with no money and I'm going to show you exactly how I did it and the advice that I took from my mentor and what it started with is, number one, is you need to have a mentor. Okay? This is someone that knows your situation, has been where you want to be, and is going to be able to give you the right kind of advice. The next thing that you're going to need is you're going to need a system. I'm going to show you the system right now. And then, between these two things, the last thing that I'm going to encourage you to need is a team. And team essentially means that you don't have to wear all the hats of all the successful operations of putting this in place.
You just need to tap into other people's brilliant abilities because anything that you don't currently know how to do you don't have to learn it you just have to have that person on your team. Here's what I did. The advice that I have received from my mentor that showed me the system that helped me put the team together was, number one, is I needed to develop my credit so that I could buy a house. For some of you that might mean credit repair. For me, I was young and didn't have credit so I needed to establish credit. I was told to have three lines of credit. I only had one. So I got two more credit cards and I was responsibly using them. How do you do that if you got bad credit? hire a credit repair company to fix that. Learn how to get good credit for the system to work. And then the second one was you have to have enough money for a small down payment. Which for me was $5000. And then the last thing that I needed to do for the system was I needed to stay in the same line of work for two years.
So for example, I couldn't be a seamstress or for a year and then like become a guinea pig trainer for a year because those are two very different lines of work. We're jobs um, so, these are the three things that I needed to have and then this is what happened. 14 months later, I possessed these things. 14 months later, I had developed my credit. 14 months later, I had saved my 5 grand and 14 months later I had completed my two-year work history. I was thinking about changing jobs. I didn't. Do you know why? cause I was following the advice of my mentor who walked me into the system. What I did is it allowed me to buy a house and I bought not just any ordinary house, I bought a house with $40,000. A pirate booty in it, right? I'm talking about equity. House was worth 150,000. I bought it for 110,000 so my net worth went up $40,000 which by the way was more than double what I made in a year.
So I'm talking about Kris Krohn starting out poor. Right? and then this house had a basement apartment and the basement apartment covered my mortgage. So that was kind of cool because I got to live for free. Which meant that I eliminated my biggest expense at that time in my life. The reason why this system was important was because twelve months later I was able to get a home equity line of credit. I got other videos on the channel here where you can research what that is.
And I was able to access this money and I used it to do what? I use it to buy a second home. Now I still lived in this home but I bought this house with well over fifty thousand dollars a pirate booty, is exciting. And then the other thing is I rented out this house and it had a $500 a month cash flow. So, collectively between my two homes my net worth was around $100,000 and I was living for free and getting paid 500 a month. Then guess what I did? Oh you're so smart. I did it again. I then, this was my P for primary residence, this was I for investment. The third house I did was that I moved into a new primary residence. This one became a rental and I rented it out and made $500 a month cash flow. So guess what? I'm making over a thousand dollars a month.
I bought this house with, you guessed it $50,000 of equity love that pirate booty and it also had a basement apartment that paid for my mortgage. Living for free, net worth of a hundred and fifty thousand dollars, making five hundred dollars a month here, five hundred dollars a month here. So are you starting to see how the system worked? the equity in this house then got used to purchase my fourth house which was an investment property that had a cash flow. And then I just started doing that system over and over again. Now by the time I have four homes I went into Phase two of the system. And Phase two of the system was now starting to approach people with money and saying, look at my track record on my portfolio. Look at my pirate booty, look at my cash flow, would you like some of that booty? and would you like some of that cash flow? I can find the deals. I've got a system in the team to make this work I need your money.
And you know what? everyone I approached that saw my return said what? I'll partner with this kid. And from that point on I started buying homes left and right without money or credit. Right now, I'm selling off one to two homes a month. I'm making tens of thousands of dollars every month on homes I bought years ago using someone else's money, reinvesting, and buy more homes. So this is a really fantastic system this is exactly how I did it. And again if you want to be wealthy with no money and do that, you can either go start a Facebook and go down and pioneer path something that's never been done before or you can leverage proven systems.
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Read MoreAlice Cooks Up A Great Retirement with the Concordia Retirement Savings Plan 403(b)
Harvey 0 Comments Planning your Retirement
Alice is a school teacher at St. Paul's Lutheran School. She recently had a conversation with her students about goals. While it's a way's off, she's started thinking more about her own goals, especially with retirement. Away from school, Alice loves to bake. There’s nothing better to her than putting the right ingredients together and creating a tasty treat for her kids and their friends. Alice has started to look at retirement the same way she does baking. If you mix the right ingredients together and have a little patience, you’ll end up with something rewarding when the time comes.
Alice is smart. She’s knows the three key ingredients for retirement income. Let’s turn it over to our retirement chef to explain. Thanks Narrator Guy. So my first ingredient is the Concordia Retirement Plan pension fund. Check out that video out to see what an amazing benefit the pension is! The second ingredient is Social Security. I’ve been paying into this government fund since I started working. When I retire, I should receive money back to help me lead the life I want to live. But it’s the third ingredient that really helps me know I’ll have enough retirement income to meet my expenses.
It’s the Concordia Retirement Savings Plan 403(b). A 403(b) is the non-profit version of a 401(k), and the CRSP has some of the lowest fees available. That means I get to keep more for my retirement! As soon as the CRSP 403(b) began, I started investing because I knew this ingredient was in my control. I have my employer put some of each paycheck into the plan. I know that, if I need to, I can pause or change my contribution because the CRSP is so flexible. But even when things were tight or the markets were down, I still regularly saved something for retirement. It was like “set it and forget it and you won’t regret it!” I’m a baker, not a banker, so luckily Concordia Plans has top-notch experts who mixed my investments among the funds they offer. I didn’t need to be an investment expert, but when I wanted to learn more, CPS always had resources available to help. When I retire, I’ll still have expenses to pay for. Some of them, like medical costs, will probably rise. Thanks to my commitment to the Concordia Retirement Savings Plan, I’ll have enough money to pay for what I need.
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Read MoreHow To Retire Early? (Young And Rich: Is It Possible?)
Harvey 0 Comments Retire Wealthy & Wise
Hey, what's up? John Sonmez here from simpleprogrammer.com. Tired of pushy recruiters sending you LinkedIn requests for jobs you have no interest in? Tired of blasting out resumes into the dark? If so, you should check out Hired.com. Hired.com flips job searching on its head by having top employers like Facebook come to you after you fill out one simple application. You also get your own job coach to help you on your next job search. If you haven't checked it out, I highly recommend you at least fill out the application. Just go to Hired.com/simpleprogrammer. When you get hired with Hired, you'll get double the normal sign-on bonus for using that link. Today we're going to be talking about real estate.
Yes. I have done some videos on real estate. Some of you are like, “What the heck? Why is this guy talking about real estate?” Well, I've done fairly well in the real estate realm. If you're interested, you can always check out my playlist on real estate investment and investment in general. I'm not going to go into all the details here, but occasionally I like to answer a few real estate questions on this channel. I got one here from Jonathan and he says, “I'm 21 and set a goal that I want to retire by 40 to 45.” Cool. “With 20K of passive rental property income.” Man, that's awesome. I like that. I love that goal. That's a good goal. “Currently saving money to buy my first property and hopefully, when I get a web development job I can speed up the process. My question is how do I plan for this goal?” This is good.
So, 21, Jonathan is 21 and he's thinking this way and he's got this plan by 40 to 45 to make 20K of passive income from rental properties. I love this. This is great. “Thanks for everything you do and have a beautiful day.” I am having a beautiful day. Thank you, Jonathan. “P.S. I was thinking of buying a duplex and live in one and I rent out the other one so basically the tenant pays my mortgage.” So, okay, there's a lot of ways to approach this. I think Jonathan has got his head screwed on right. Well, I'll start with the last, the P.S. of renting out a duplex and living in one side. I think that's a great idea. This is a fantastic thing. More people should do this. A lot of you young people out there that are thinking about renting or buying a house, consider buying a duplex and renting out one side and if you find the right deal which—it's out there, you could actually have the renters pay your rent.
You see what I'm saying? You could actually live for totally free by having a duplex and renting out one side. I'm not going to say it's going to be super easy. I'm not going to say that those deals are everywhere. It depends on where you're at. You're not going to find that deal in California or New York, San Francisco, not going to happen, but if you're in the Midwest you might be able to find that deal. I've seen it before. I think that's a great idea, but let's talk about the plan. 21, you want to retire by 40 to 45. You want to get 20K of passive real estate income. It's not going to be easy, but it's certainly doable. What you need to do is you need to calculate backwards where you need to be and have a real solid plan for this.
I can give you a general outline, but I haven't run the numbers so I can't tell you exactly. There are going to be some factors in here, but you actually need to take a spreadsheet and actually need to calculate this and figure this out. It's going to be fairly complex, but you don't have to be super detailed. You can kind of ballpark this, but you do need a spreadsheet. You can get some rough answers here, but calculate this out, 20K of passive income from real estate. Let's say 45. What does your gross need to be? You're going to have expenses, you're going to have rents, I mean you're going to have property management, you're going to have a bunch of things here. That can give you an idea of what kind of wrench you need to be pulling in. It's not going to be a 20K wrench, you're not just getting 20K. It might be like 30 or 40K a month of rents. In order to get 40K a month of rent how many properties do you need and how much will those properties cost? How can you divide that over time and put inflation into the equation a little bit here over that period of time? Work backwards and make a spreadsheet and run some scenarios.
This is going to take time and some planning. Like I said, you can rough ballpark it. If I were just going to give you what I think would probably work for you, it also depends on how big your budget is. How much money are you investing every year? How much money do you have to invest every year. If you can put 10K down onto a rental property every year that's different than, “Hey, I've got 50K to invest in real estate every year.” That's different. Or 100K. Those are all different scenarios. What you're planning based on your current scenario might—there may not be—there might be this gap and you might be like, “Well, how do I get there?” It might not be apparent.
You might have to do some other things. You might need to make more money in your job or start a side business in order to fuel that. I had to do that to reach some of my real estate goals. Think about that and calculate that out. I'll give you kind of a rough timeline, a rough plan that I would have if I were you which would be something like—and this was the plan I initially developed when I was doing this which would be to buy one property every year, regardless. The nice thing I like about this plan is that it's scalable.
The size of the property depends—is dependent upon how much money that you have in that year. When I first started in real estate investment when I was close to your age, I think I bought my first house at 19, but I really started doing investments around 21 and started this plan of buying one house per year. I think the first house that I bought I was able to put $10,000 down. It was like a $100,000 house or $120,000 house. The next year it was probably about the same and then probably like the third or fourth year I had more money. I was able to put $20,000 or $30,000 down. I got to the point where I was buying properties and I was putting about $20, $30, $40,000 down every year on a property when I buy it. Some of that was because of the real estate that I was already making me money. Some of it was because I was making more money in my job and I had businesses and side things going on which helped me to do that. That's the kind of plan that I would—it's not going to happen magically. I think that's the key thing. You actually have to have a solid plan for this and you can run these numbers and calculate this out.
There's actually a really good book that I recommend called The Millionaire Real Estate Investor. I think that's by Garry Keller, the founder of Keller Williams if I recall correctly. I don't recommend very many real estate books, simply because a lot of them are crap. The reason why I'm really going to recommend that book to you is because it has these charts that show you—it gives you a realistic expectation over 20 years what the value of a property is likely to be, how much money you're likely to make from it, cashflow and all that. Again, it's as complex equation. You're not going to be able to nail this down perfectly, but at least if you run the numbers and you do the best job that you can, you can have a ballpark idea and you can always adjust the plan. You've got to have—you've got to know where you are and where you need to go in order to reach these goals. I'll also recommend for you—I have a course that I created called Simple Real Estate Investing for Software Developers.
You can check that out here. If you buy that course, obviously it has a money back guarantee on it, but that's going to help you to give you the basics of everything I know about investing. Just to give you a background, I have about 26 rental properties. They are all paid off. I started investing when I was 19. I kind of know what I'm talking about here. I don't give a lot of bull shit advice about this. I give you exactly—practical advice on how to get started and how to do this.
The reason why I created the course, even though it might not seem like it goes along with a lot of my other content, it was just simply because I was tired of so many people giving BS real estate advice and doing all these kind of scamming, no money down, speculative moves that just doesn't make sense. You need some kind of practical advice so that's what I put together there. Go check that out. This is good. I think you've got a good plan here. You just need to develop the plan further and it's going to be very dependent on your individual factors and—I think you have information though to say, “Okay, can you do this in 45—by the time you're 45?” absolutely! I believe that you can. It's not going to be easy, it's going to be hard to do. 20K is a pretty big number but it's certainly possible, but you're going to have to start moving now, which it seems like you're going to do, and you have to have a plan and it's going to take a lot of work and a lot of effort and you got to find good deals in order to be able to do this in that time frame.
All right, I hope that is helpful to you. If you have a question for me, you can email me at [email protected]. Don't forget to click the subscribe button if you haven't already. Click that Subscribe. Click the bell to make sure you don't miss any videos especially if you like the real estate stuff because, hey, those videos might not show up and then you'd miss it and then you wouldn't find out the secret to life and how to make millions of dollars. All right, I'll talk to you next time. Take care .
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Read MoreTips for Retirement Planning
Harvey 0 Comments Retiree Tips and Tricks
I'M ASHLEY, SEE YOU NEXT WEEK. THIS MORNING, WE ARE TALKING THE WORD EVERYBODY LOVES TO HEAR, AND THAT IS RETIREMENT. HERE TO HELP US MAKE IT ALL POSSIBLE IS JEFFREY. GREAT TO HAVE YOU HERE TODAY. PEOPLE GO TO WORK EVERY DAY AND IT'S THE THING THAT THEY HAVE IN THE BACK OF THEIR MIND ALL THE TIME AND YOU SAY THERE ARE A BUNCH OF DIFFERENT STAGES TO RETIREMENT. IN SIMPLE TERMS, WE CALL IT BEGOGO YEARS AND THEN THE SLOW-GO YEARS AND THEN THEY WON'T-GOY YEARS. FOR MANY, IT SEEMS LIKE A DAUNTING TASK. HOW CAN PEOPLE MAKE THIS POSSIBLE? STARTING EARLY IS ALWAYS BENEFICIAL THAT EVEN IF YOU HAVE NOT STARTED PLANNING YET, YOU WILL GET STARTED. POSSIBLY A CERTIFIED FINANCIAL PLANNING PROFESSIONAL. GO TO THE WEBSITE AND YOU CAN FIND ONE. THE PLANNING IS IMPORTANT, ESPECIALLY FOR THAT GOING PHASE, IS THAT THE POINT WHERE YOU ARE JUST STARTING OUT AND PEOPLE ASKED THE QUESTION DO I HAVE ENOUGH TO RETIRE WITH? AM I GOING TO BE OK? AND THEN IT'S ALL ABOUT THE EXCITEMENT AND THE PLANNING. WHEN WE GET CLOSER TO THAT AND SAY I'M GOING TO RETIRE, ONE OF MY FIRST QUESTIONS, WHERE DO YOU GO? WHAT IS THE FIRST THING YOU'RE GOING TO DO? I WANT THEM TO BE THINKING ABOUT THE FUN THINGS.
ONCE WE KNOW THE FINANCES WILL BE OK, START PLANNING FUN STUFF THE MORE ACTIVE. WE DEVELOP SOME PLANS WHERE PEOPLE HAVE MORE MONEY TO TRAVEL WITH FOR THE FIRST FIVE TO 10 YEARS, AND AFTER THAT, PEOPLE TEND TO PULL BACK A LITTLE BIT. THAT IS THE SLOW-GO YEARS AND THE FINAL PHASE WHEN MORE PEOPLE ARE FOCUSED ON, WHAT DO I DO WITH THE MONEY I'M NOT GOING TO USE? HOW DO I TRANSITION TO MY FAMILY AND THE MOST TAX EFFICIENT MANNER POSSIBLE? AND I TALK ABOUT THAT IN MY BOOK.
THE BOOK HAS 30 YEARS OF INFORMATION AND IT'S A NICE, SIMPLE READ. BECAUSE EVERYBODY WORKS SO HARD ALL OF THEIR LIFE TO GET TO THE GOAL OF RETIREMENT. IN RETIREMENT IS SUPPOSED TO BE FUN. YOU'RE SUPPOSED TO ENJOY YOUR LIFE. EVERYBODY HAS A DIFFERENT PERSPECTIVE AS TO WHAT THAT IS. SOME GUYS WANT TO GO FISHING EVERYDAY. SOME MIGHT WANT TO DO DIFFERENT THINGS. GOLFING, WHATEVER IT MIGHT BE. WHATEVER IS IMPORTANT. THE MOST SUCCESSFUL KINDS WE WORK WITH RETIREMENT WISE ARE THOSE THAT HAVE A GOOD CIRCLE OF RUNS AND ENOUGH HOBBIES TO KEEP THEM BUSY. IF YOU'VE BEEN WORKING 40 HOURS, IT'S A LOT OF TIME. I'VE GOT ANOTHER STORY ABOUT THAT. LOTS OF TOGETHERNESS. IT REALLY IS THE DREAM FOR SO MANY PEOPLE. IF I'M COMING TO SEE YOU, HOW DO YOU PUT PEOPLE'S MINDS AT EASE? YOU HAVE THAT WORRY IN THE BACK OF YOUR MIND ALL THE TIME. WE TRY TO KEEP THINGS SIMPLE BUT WE HAVE A VERY SOPHISTICATED SOFTWARE THAT WE USED BEHIND THE SCENES AND WE ACTUALLY SHOW PEOPLE RESULTS.
WE COULD IMPORT ALL YOUR DETAILS NOW, WHAT IS YOUR LIFESTYLE EXPENSE, WHAT ARE THE ASSETS THAT YOU HAVE, WHAT IS THE INCOME YOU WILL HAVE COMING IN, AND WE HAVE PROBABILITIES. WE CAN DO UP TO 10,000 VARIATIONS BETWEEN NOW AND RETIREMENT WITH LIFE EXPECTANCY, SO WE TRY TO PLAN UP TO AGE 90. AND WE SAY, HERE IS YOUR PROBABILITY OF SUCCESS. THANKS SO MUCH FOR COMING IN. IF YOU WOULD LIKE MORE .
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Read MoreSaving for Retirement According to Your Age
Harvey 0 Comments Planning your Retirement
Let's take a look. If you're in your 20s 30s 40s or 50s – What is the game plan? Here this is really cool. I think this helps people and also maybe might motivate you to take action a little bit more. Let's say you're 30 years old, you want to have at least one times your salary saved. So if you're making $50,000 a year ,you want to make sure that you have 50 gramme in the bank. Let's jump up to 45. You want to have 4 times your annual income saved. Once you get into your 60s, right, that's 8 times. That's a huge number! And you know, procrastination is probably one of the key components of why people are not necessarily successful, but at least this put you in the… I mean one of the biggest questions Al and I I get is, “Am I on track? How do I compare to other people that you see?” Well this is a good idea to take a look at how much money are you making, multiplied by those factors, and then that's going to get you in the ballpark.
Right? Because I think a lot of times it's just simple arithmetic. How much money do I need to maintain the lifestyle that I want long-term? Most of you don't have enough. We're not here to put fear in you. We want to make sure that you're responsible to look at, “Hey, how much do I need?” To give you the confidence to do all the things that you want to do in retirement. Hey, Joe, why don't we do kind of a simple example of let's say some different ages. Perhaps your age 40 or 50 or 60.
Let's say you have $50,000 saved. Let's say you want to reach that $500,000 savings goal. Well, how much do you need to save per month to be able to do that? In this slide it's showing you $179 per month if you're 40. Look what happens if you're in your 50s. $862 dollars per month and if you're 60 you got to fast track this. That's $3,875 per month. That's of course at a 7% rate of return and assuming that you retired age 67.
Just four grand a month. Oh yeah, no problem. That does show why you want to start as early as possible when you're saving. .
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Read MoreWhat Is The 4% Rule? How Much Money Do I Need To Retire?
Harvey 0 Comments Retiree Tips and Tricks
In this video, I want to explain the 4% rule. This is also known as the Safe Withdrawal Rate – or basically the rate at which you can spend your money without ever running out of money. An easy way to calculate what this means for you – and how much money you’ll need to retire is by flipping it around and multiplying your yearly expenses by 25. For example, if you and your family spend $40,000 per year, you’ll need to have 1,000,000 invested to not run out of money.
There must be some limit to how long you can withdraw 4% and still have money left over, right? The study that explains the 4% rule is called the Trinity Study, and it looked at how much money you’d need to retire for every year between 1926 and 2009. The study found that if you invest 50% of your money in stocks and 50% of your money in bonds, withdrawing 4% of your money will be fine for 25 years, 100% of the time. Doing it for 30 years – you’ll still have money left over 96% of the time. only if you retired in a very unlucky year and never made any money after retirement including pensions or social security – the 4% rule didn’t work. So to make sure we’re all clear – the 4% rule isn’t 100% foolproof.
But those odds are pretty darn good – and even while I hope to retire from regular work longer than 30 years – i know I’ll continue to make money doing things i love which will make sure that the 4% rule does succeed. For those of you that want to be 100% sure your money will never run out (especially for those of you who plan to retire longer than 30 years), use the 3% rule and only withdraw 3% of your investments per year.
Let’s get back to the 4% rule and dive a little deeper. As many of you are probably asking, why is 4% the safe number and not 10% or 2%. Very simply, investing money will pay you dividends and increase in value at an average rate of 7% per year. On average inflation is about 3%, basically decreasing the actual value of the money you have. Combine those two numbers, and you’re a 4% – your net income will increase by 4% each year.
And if you spend that 4% without going over, you’ll end the year with the same amount that you’ve started… in perpetuity. Okay okay – i know a lot of you say this is crazy – what about the recession – you can’t predict stocks – and lots more thoughts. But let’s look at those numbers even deeper. Since 1900… over one hundred years ago, the average return per year has been 7% including reinvested dividends (meaning you reinvest the dividends – or the money the companies pay your for investing – into your investment). For inflation – since 1913 – over one hundred years ago, the average yearly inflation is 3.22% Even through the great depression, world wars, crazy years of inflation, more wars, and the great recession the average return rate has been 7% and inflation has been just over 3% What does this tell us? It tells us that investing is more about being patient and investing early rather than trying to time the market.
Now this doesn’t mean that it can’t change. Investing is a risk. That’s why you do it and make money from it. But world war iii could happen. another even greater depression could happen. and we have to be prepared for something like that. because if you retired with 1,000,000 in 2007, assuming you’d be able to spend 4% of your net worth per year, you were in for a surprise – which might mean going back to work for a few years and waiting out the recession.
Hopefully, if you did that… and left your investments in the stock and bond market, you would be in good shape. The key takeaway is that throughout the history of modern america – you’ll be fine to retire using the 4% rule. So calculate your yearly expenses… include some emergency padding… and start investing to get to that goal of 25 times your expenses.
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Read MoreFactors That Can Reduce Retirement Income
Harvey 0 Comments Planning your Retirement
There are many different factors that can reduce retirement income. The first may be fairly obvious, but it's the effect of death. For two spouses when there's a pension involved, the death of a spouse could mean the loss of a pension income. Now if there's a survivor benefit, that income may continue, so it's important to evaluate your options when making pension decisions. A lot of people use insurance to protect against this type of income loss. Another way death can reduce retirement income has to do with Social Security. When two spouses are receiving Social Security and one spouse passes there will be a loss of one of the benefits. Now, the surviving spouse will receive the higher of the two benefits, but there still will be some loss of income. The final way that death can reduce retirement income has to do with taxes. Moving from married filing jointly to now filing single can push the survivor into a higher income tax brackets. The reason for this is that the income thresholds for married filers is about twice what it is for single filers. This can have a major impact on the surviving spouse's net after tax income in retirement.
Taxes in general is another area that a lot of people overlook when it comes to retirement income. The reality is that taxes will take much more from you than the market ever can. For instance, going back to 2008 during the Great Recession, the average portfolio might have declined 20 to 30 percent, assuming it was well diversified, of course. That might have taken a couple of years to recover, but taxes in retirement can easily cost anywhere from 30 to 40 percent. And that's money that will never come back. So it's really important to consider where your different sources of income are coming from in retirement. Would it all come from pensions, Social Security, IRAs, 401(k)s, sources that will be taxed at ordinary income rates? Or do you have good tax diversification where you can choose from pulling money from maybe a Roth IRA raise or non-qualified accounts and really get a lot of control over your taxes in retirement? And finally, inflation. Inflation is absolutely something that can reduce your income in retirement. And it does this by reducing the purchasing power of your dollar in retirement.
Inflation isn't just something that happened in the past – things will continue to cost more in the future. So let's look back 30 years. 30 years is about the average timeframe for most people in retirement. So in 1989, the average cost of a first class postage stamp was twenty five cents. Today that same stamp will cost you fifty five cents. Also in 1989 the average cost of a new car was $15,000. Today the price of a new car will set you back on average $37,000. So you need to look at how well your different sources of income will keep up with inflation during retirement. For help optimizing your retirement income, visit us at PureFinancial.com. .
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Read More10 tips to ensure a successful retirement
Harvey 0 Comments Planning your Retirement
– Are you looking forward to retirement? Of course you are. Check out our top 10 tips to make sure you're on track. The sooner you get started, the more likely you'll have a happy and healthy retirement. Tip one is take stock. How do you want to live in retirement? Do you want to move to a new area? Do you want to do a bit of travel? How much is it going to cost? How much do you have saved? Are you on track? If not, what are you
going to do to get there? Tip two. Plan for the rest of your life. Most people are in retirement
longer than they expect. While your health and family history will influence the length of your life, most people are living longer. In fact, you could easily
live into your 90s. Plan for the long term and don't forget that you may need extra
assistance as you get older. Tip three. Review your investments. For your savings to last
the rest of your life you need to have the right mix of growth and defensive assets and you also need to have something to bring in an income and also a bit of growth. Diversifying your assets across cash, fixed interest, shares and property can help smooth the returns. Tip four. Stick to your plan. Investments can quickly change in value and while it's tempting
to sell out of shares when markets go south, this is often the worst
thing that you can do. It's important to remain
focused on the long-term as they usually recover
if given a long enough period of time. Tip five. Get the structure right. By changing the way you own investments and the way you receive the income can reduce the amount of tax you pay and also increase the
amount of age pension or DVA pension you receive. Even if you aren't
entitled to an age pension, you may be eligible for discounts which can save money over the long term. Tip six. Get your affairs in order. Estate planning allows you
to pass on the right assets to the right people at the right time. Unfortunately we are all going
to pass away at some point. The first step in a good estate plan is by getting a will. You should also speak with your solicitor about enduring power of attorney and advanced medical directive. And remember to review your estate plan every few years as
circumstances change over time. Tip seven. Stay fit and healthy. If you stay physically and mentally active you're more likely to enjoy
a longer, healthier life. Take up a hobby, learn a new skill or maybe volunteer in the community. Tip eight. Rethink the move. Some retirees move to a new location that they've always wanted to retire in and it hasn't measured
up to what they expected. If this is something you want to do, perhaps move there
temporarily just to make sure it lives up to your expectations. Tip three. Review your investments. For your savings to last
the rest of your life, you need to have the right mix of growth and defensive assets and you
also need to have something to bring in an income
and also a bit of growth. Diversifying your assets across cash, fixed interest, shares
and property can help smooth the returns. Tip four. Stick to your plan. Investments can quickly change in value and while it's tempting
to sell out of shares when markets go south, this is often the worst
thing that you can do. It's important to remain
focused on the long-term as they usually recover
if given a long enough period of time. Tip five. Get the structure right. By changing the way you own investments and the way you receive income, you can reduce the amount of tax you pay and also increase the
amount of age pension or DVA pension you receive. Even if you aren't
entitled to an age pension, you may be eligible for discount. (upbeat music)
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