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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
This idea of how much you're supposed to have saved is a trap. Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to that oversimplified advice you've heard hundreds of times. This show is about context. We want to get into the nitty gritty.
Mike:Now that said, remember, it's just a show. It's not financial advice. So with that said, consider education or good information. Text your questions to (913) 363-1234, and we will feature them on the show. As always, David, what do we got today?
David:How much should I have saved at 55 years old? The
Mike:the reason why I don't like these questions is because they're based on the premise of comparing yourself to others. Everyone has a different income stream that they want. Everyone has a different lifestyle that they desire. Everyone has a different amount of it's hard to say how much you should have because I'm who's like, to say? Yeah.
Mike:You know, this is the trap of keeping up with the Joneses. Says so many people will lose years of their life because they just don't have context to their situation. They're comparing themselves to others and feel like they're always behind. I mean, I think what what's the average? Do you know the average?
Mike:I mean, a 55 year old
David:Yeah. So according to some research done by Vanguard, the average was a 54 to to 65 year old has 271,000 in their four zero one k.
Mike:Okay. So I guess the answer is two seventy one if you wanna be standard. Yeah. But it's so out of context.
David:Right.
Mike:So if if we back this out, really, the question is how much income do you want in retirement after tax? Has to be after tax. Mhmm. Because if you look at before tax, then you're gonna miss the tax bracket, your effective tax rate, how taxes can manipulate that. So after tax income.
Mike:When you understand that, and then you set a goal of when do you want to retire, then you work backwards.
David:Yeah. Okay. People might miss that.
Mike:Always working backwards. I have helped people retire on time. When I say on time in quotations, it's because they were done with their work. They they just needed a break from it. They're not sitting at home watching TV.
Mike:Right? Mhmm. You know, I I joke with friends that are conservative. You don't wanna sit home and watch Fox News all day long. Right.
Mike:And if they're more liberal, you don't wanna sit home and watch CNN all day long. Right? Or MSNBC or whatever. Like, that that's not a healthy relationship with with life. No.
Mike:You want to work. It just might not be in your current job, in your current role, with the current stress and profession that you've chosen. So what does your life look like? Reverse engineer that, and then figure out, okay, well here's Social Security. Here's if I turn it on at 64 years old or 67 years old and work backwards.
Mike:I've helped people retire with 200,000 or less. And I've told people with $1,000,000 or $2,000,000 you can't afford to retire yet. So this idea of how much you're supposed to have saved is a trap. It's a marketing ploy to try and push away those who haven't saved enough for them to rationalize their 1% fee and make money off of you, when really a lot of people have already saved enough. But because they don't have the $500,000 minimum or the million dollar minimum
David:Right.
Mike:They're being ostracized by the industry because they can't make enough money off you to rationalize their time. And that's that's not disgusting. It's not wrong. I mean, if I have a Honda budget, I can't be upset for Rolls Royce not wanting me to sell a car.
David:Yeah. Right.
Mike:Right? And I'm not saying that these higher feed places that have higher minimums are any better than the lower, you know, anyone can this is finance. Yeah. Anyone can give tax advice if they know what they're talking about and have their credentials and so on. Right?
Mike:The experience. Anyone can buy Apple. Anyone can buy the S and P 500 ETF. There's no barrier to entry to being able to invest, being able to do tax planning, being able to run an Excel spreadsheet to put your plan together. Yeah.
Mike:Or what? Google Sheets.
David:Google Sheets.
Mike:I guess Excel you have to pay for, but Google Sheets are free.
David:That's true.
Mike:So there is no barrier to entry. It's a question of how much do you need, when do you need it, and is that the right time to retire from your career? Because a lot of people have a lot of purpose from their career and shouldn't retire because retirement might actually be worse for them than than continuing to work. And then you back in the numbers of how much needs to be saved, where are those funds, and how do get them out tax free.
David:So people could be working longer than they have to if they're trying to get to some number. Like, I gotta get to 3 quarters of a million. Gotta get to a million.
Mike:Well, it's that like arbitrary idea of I just I just wanna hit a million dollars. Why? Because I just I just want to. It's a feeling. Yeah.
Mike:It's like, well, you're at 800,000 right now and you can afford to retire right now. So do you wanna hit a million dollars to say that you hit a million dollars Mhmm. And give up an extra couple of years of your life? Like, what's the cost of the goal? Yeah.
Mike:Really? And that's often not not connected. Many of the conclusions people make are not based on the evidence given. I wanna retire. I hate my job.
Mike:Okay. You can retire today, but I want a million dollars.
David:I guess if you like your job, then that's probably fine. Right?
Mike:If you like your job, keep doing your job. Yeah. Retire on time was purposely written to say on time, not how to retire as soon as possible.
David:Right.
Mike:Not how to retire as late as possible, or how to retire and destroy your purpose of life, how to retire quickly and become depressed. Like, weren't titles we wanted to use.
David:You didn't workshop that one?
Mike:I didn't. Yeah. How to retire on time means it makes sense in that moment to transition out of your income based career and into the next phase of life, which could be a continuation of that career with but from a different position. So you could be a high stress engineer that's going to more of a fun academic engineering position. You're professor and you enjoy that.
Mike:Or maybe you just really like working on this type of stuff, but you're not a manager anymore. You've taken a step back, but you just love what you do. Yeah. Right? Those are normal things that people do, but societally we're supposed to retire soon because that means we are wealthy and powerful and successful.
Mike:Mhmm. That's ridiculous. So, yeah, the answer is figure out really, like, what does your retirement look like from a lifestyle standpoint? How much does that cost? Run your projections, and does that work?
Mike:And then if not, what do you need to adjust today to then land that plane? That's it's it's really that simple. I think too much too much marketing influences us to have expectations that don't align with our individual reality.
David:And for a side note here too, that Vanguard found that the average, like 65 plus has in their four zero one k, 299,000.
Mike:Yeah. So it might mean a lot of people can't afford to retire because they've got what's that? Champagne taste on a a beer budget? That the expression?
David:It's very similar. It's close to that if that's not verbatim, but yes. Mean, I if yeah. If you wanna buy a yacht and, like, go to Greece, then maybe 300 k
Mike:is not enough. Probably not enough to buy the yacht. Yeah. So it it put context into it. Don't don't be bullied by the ambiguous marketing material that tries to filter certain people out so they can only work with other people.
Mike:Like that's just it's just their marketing and you don't want to influence your individual reality. Right. That's all the time we've got for this question. If you enjoyed it though, make sure to subscribe to our channel and visit us on retireontime.com, where you can grab the book, the workbook, the worksheets, all of this great stuff. All at retireontime.com, that and more.
Mike:We'll see you in the next show.