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How To Save For Retirement: Suze Orman Shares Her Best Money Advice | TODAY

>>> AND WE’RE BACK WITH OUR >>> AND WE’RE BACK WITH OUR SPECIAL SERIES LIVING LONGER SPECIAL SERIES LIVING LONGER TODAY, EXPLORING WAYS TO LIVER TODAY, EXPLORING WAYS TO LIVER NOT ONLY LONGER BUT BETTER. NOT ONLY LONGER BUT BETTER. >> THIS MORNING WE’RE FOCUSING >> THIS MORNING WE’RE FOCUSING ON YOUR FINANCES AND THE NEW ON YOUR FINANCES AND THE NEW ADVICE EXPERTS ARE GIVING TO ADVICE EXPERTS ARE GIVING TO MAKE YOUR MONEY REALLY LAST. MAKE YOUR MONEY REALLY LAST. >> THE GOOD NEWS AMERICANS ARE >> THE GOOD NEWS AMERICANS ARE LIVING LONGER, WHAT THAT MEANS, LIVING LONGER, WHAT THAT MEANS, A NEW FOCUS ON MAKING YOUR MONEY A NEW FOCUS ON MAKING YOUR MONEY LAST. LAST. >> AS YOU’RE PLANNING FOR YOUR >> AS YOU’RE PLANNING FOR YOUR FUTURE, DON’T UNDERESTIMATE HOW FUTURE, DON’T UNDERESTIMATE HOW LONG YOU’RE GOING TO LIVE. LONG YOU’RE GOING TO LIVE. >> IN FACT, ABOUT ONE OUT OF >> IN FACT, ABOUT ONE OUT OF EVERY FOUR 65-YEAR-OLDS TODAY EVERY FOUR 65-YEAR-OLDS TODAY WILL LIVE PAST 90.

WILL LIVE PAST 90. >> THE OLD ADVICE USED TO BE >> THE OLD ADVICE USED TO BE THAT AS YOU’RE PLANNING FOR THAT AS YOU’RE PLANNING FOR RETIREMENT EXPECT TO LIVE INTO RETIREMENT EXPECT TO LIVE INTO YOUR 80s. YOUR 80s. NOW THE EXPECTATION IS THAT NOW THE EXPECTATION IS THAT YOU’LL HAVE A GOOD CHANCE OF YOU’LL HAVE A GOOD CHANCE OF LIVING INTO YOUR 90s, MAYBE EVEN LIVING INTO YOUR 90s, MAYBE EVEN CELEBRATING YOUR 100th BIRTHDAY. CELEBRATING YOUR 100th BIRTHDAY. >> WITH LONGEVITY CAN COME THE >> WITH LONGEVITY CAN COME THE ADDED STRESS TO SAVE MORE. ADDED STRESS TO SAVE MORE. >> PLANNING FOR THE FUTURE HAS >> PLANNING FOR THE FUTURE HAS BECOME A LOT MORE CHALLENGING BECOME A LOT MORE CHALLENGING AND REALLY THE ONUS IS NOW ON AND REALLY THE ONUS IS NOW ON THE INDIVIDUAL MORE THAN EVER.

THE INDIVIDUAL MORE THAN EVER. >> SO HOW DO WE MAKE SURE WE’RE >> SO HOW DO WE MAKE SURE WE’RE FINANCIALLY PREPARED FOR ALL FINANCIALLY PREPARED FOR ALL THOSE EXTRA YEARS? THOSE EXTRA YEARS? IT’S EASY. IT’S EASY. JUST CALL SUZE ORMAN, A PERSONAL JUST CALL SUZE ORMAN, A PERSONAL FINANCE EXPERT. FINANCE EXPERT. SHE HOSTS SUZE ORMAN’S WOMEN AND SHE HOSTS SUZE ORMAN’S WOMEN AND MANY PODCASTS. MANY PODCASTS. >> WE’RE LIVING LONGER. >> WE’RE LIVING LONGER. THAT’S GREAT, BUT THE BAD NEWS THAT’S GREAT, BUT THE BAD NEWS IS, WE SURVEYED OUR TODAY.COM IS, WE SURVEYED OUR TODAY.COM AUDIENCE.

AUDIENCE. THEY SAID 60% OF THEM FELT LIKE THEY SAID 60% OF THEM FELT LIKE THEY DON’T HAVE THE AMOUNT OF THEY DON’T HAVE THE AMOUNT OF MONEY THAT THEY’RE SAVING RIGHT MONEY THAT THEY’RE SAVING RIGHT NOW THAT, THAT IT WON’T LAST NOW THAT, THAT IT WON’T LAST THEM THROUGH THEIR RETIREMENT. THEM THROUGH THEIR RETIREMENT. >> IF YOU REALLY THINK ABOUT IT, >> IF YOU REALLY THINK ABOUT IT, YOU GUYS, MOST PEOPLE BARELY YOU GUYS, MOST PEOPLE BARELY HAVE THE MONEY TO PAY THEIR HAVE THE MONEY TO PAY THEIR BILLS TODAY LET ALONE SAVE IN BILLS TODAY LET ALONE SAVE IN THEIR MINDS FOR THE FUTURE.

THEIR MINDS FOR THE FUTURE. >> PEOPLE FEEL LIKE THEY CAN’T >> PEOPLE FEEL LIKE THEY CAN’T SAVE. SAVE. >> THEY JUST FEEL THAT WAY, AND >> THEY JUST FEEL THAT WAY, AND THEY HAVE TO CHANGE THAT BECAUSE THEY HAVE TO CHANGE THAT BECAUSE THEY ARE GOING TO SPEND MORE THEY ARE GOING TO SPEND MORE YEARS IN RETIREMENT THAN THEY YEARS IN RETIREMENT THAN THEY EVER DID WORKING IF YOU THINK EVER DID WORKING IF YOU THINK ABOUT IT BECAUSE MOST PEOPLE ABOUT IT BECAUSE MOST PEOPLE THINK THEY’RE GOING TO RETIRE AT THINK THEY’RE GOING TO RETIRE AT 65, MAYBE THEY WORK 30 YEARS, 65, MAYBE THEY WORK 30 YEARS, THEY’RE GOING TO LIVE TO 100 THEY’RE GOING TO LIVE TO 100 POSSIBLY. POSSIBLY.

>> OENGWNING A HOUSE WAS ALWAYS >> OENGWNING A HOUSE WAS ALWAYS THE PLAN, BUT FOR THESE THE PLAN, BUT FOR THESE MILLENNIALS, THEY’RE OPEN ABOUT MILLENNIALS, THEY’RE OPEN ABOUT THE FACT THEY THINK THEY’LL THE FACT THEY THINK THEY’LL NEVER BE ABLE TO AFFORD A HOUSE, NEVER BE ABLE TO AFFORD A HOUSE, NEVER MIND SOME LONGEVITY OR NEVER MIND SOME LONGEVITY OR 401(k).

401(k). >> THAT’S NOT SUCH A HORRIBLE >> THAT’S NOT SUCH A HORRIBLE THING. THING. I DON’T THINK THAT THE KEY TO I DON’T THINK THAT THE KEY TO YOUR RETIREMENT IS OWNING A YOUR RETIREMENT IS OWNING A HOME. HOME. I THINK THE KEY TO YOUR I THINK THE KEY TO YOUR RETIREMENT IS HAVING ENOUGH RETIREMENT IS HAVING ENOUGH MONEY TO PAY WHATEVER YOUR MONEY TO PAY WHATEVER YOUR EXPENSES HAPPEN TO BE SO THE KEY EXPENSES HAPPEN TO BE SO THE KEY IS TO GET RID OF AS MUCH IS TO GET RID OF AS MUCH EXPENSES AS YOU CAN, DON’T HAVE EXPENSES AS YOU CAN, DON’T HAVE DEBT. DEBT. IF YOU DO HAVE A HOME, MAKE SURE IF YOU DO HAVE A HOME, MAKE SURE YOUR MORTGAGE IS PAID OFF BY THE YOUR MORTGAGE IS PAID OFF BY THE TIME YOU RETIRE. TIME YOU RETIRE. THAT WOULD BE MY NUMBER ONE TIP THAT WOULD BE MY NUMBER ONE TIP TO TELL EVERYBODY THEY HAVE GOT TO TELL EVERYBODY THEY HAVE GOT TO DO IF THEY DO OWN A HOME.

TO DO IF THEY DO OWN A HOME. >> WE’RE GOING TO GET INTO THAT. >> WE’RE GOING TO GET INTO THAT. WE HAVE THE THREE W’S. WE HAVE THE THREE W’S. THE FIRST IS WHERE. THE FIRST IS WHERE. WHERE IS THE BEST PLACE TO WHERE IS THE BEST PLACE TO INVEST YOUR MONEY SO IF YOU DO INVEST YOUR MONEY SO IF YOU DO HAVE 30ISH YEARS OF RETIREMENT HAVE 30ISH YEARS OF RETIREMENT YOU’RE SET? YOU’RE SET? >> I’VE SAID FOR A LONG TIME, >> I’VE SAID FOR A LONG TIME, JUST FORGET THE TAX WRITE OFFS JUST FORGET THE TAX WRITE OFFS OF YOUR PRETAX 401(k) OR IRA. OF YOUR PRETAX 401(k) OR IRA. FORGET THOSE NOW, AND IF YOUR FORGET THOSE NOW, AND IF YOUR CORPORATION OFFERS IT, CAN YOU CORPORATION OFFERS IT, CAN YOU CO CO DO A ROTH 401(k) OR A ROTH IRA DO A ROTH 401(k) OR A ROTH IRA WHICH ARE AFTER TAX WHICH ARE AFTER TAX CONTRIBUTIONS.

CONTRIBUTIONS. WHY? WHY? YOU DON’T HAVE TO WORRY WHAT THE YOU DON’T HAVE TO WORRY WHAT THE TAX BRACKETS ARE GOING TO BE 20, TAX BRACKETS ARE GOING TO BE 20, 30, AND 40 YEARS FROM NOW. 30, AND 40 YEARS FROM NOW. I PERSONALLY THINK THEY’RE GOING I PERSONALLY THINK THEY’RE GOING TO SKYROCKET OVER THE YEARS, SO TO SKYROCKET OVER THE YEARS, SO THEREFORE WHAT YOU SEE IS WHAT THEREFORE WHAT YOU SEE IS WHAT YOU GET IN A ROTH IRA OR A ROTH YOU GET IN A ROTH IRA OR A ROTH 401(k). 401(k). AGAIN, IT’S PRETAX VERSUS AFTER AGAIN, IT’S PRETAX VERSUS AFTER TAX, BUT AFTER THAT IT’S TAX TAX, BUT AFTER THAT IT’S TAX DEFERRED VERSUS TAX FREE. DEFERRED VERSUS TAX FREE. IT’S FOR YOUR BENEFICIARIES IN A IT’S FOR YOUR BENEFICIARIES IN A PRETAX ACCOUNT THEY’RE GOING TO PRETAX ACCOUNT THEY’RE GOING TO PAY TOTAL TAXES ON IT. PAY TOTAL TAXES ON IT.

>> LET’S GO BACK TO DEBT FOR A >> LET’S GO BACK TO DEBT FOR A SECOND. SECOND. FOR PEOPLE WHO HAVE STUDENT FOR PEOPLE WHO HAVE STUDENT LOANS, THEY’VE GOT CREDIT CARDS, LOANS, THEY’VE GOT CREDIT CARDS, THEY’VE GOT THAT MORTGAGE. THEY’VE GOT THAT MORTGAGE. HOW DO YOU PRIORITIZE THE DEBT? HOW DO YOU PRIORITIZE THE DEBT? WHAT DO YOU PAY AND WHEN? WHAT DO YOU PAY AND WHEN? >> STUDENT LOAN DEBT IS THE MOST >> STUDENT LOAN DEBT IS THE MOST DANGEROUS DEBT YOU CAN HAVE BAR DANGEROUS DEBT YOU CAN HAVE BAR NONE BECAUSE IN 90% OF THE NONE BECAUSE IN 90% OF THE CASES, 99%, IT IS NOT CASES, 99%, IT IS NOT DISCHARGEABLE IN BANKRUPTCY. DISCHARGEABLE IN BANKRUPTCY. SO THEY HAVE THE LEGAL AUTHORITY SO THEY HAVE THE LEGAL AUTHORITY TO GARNISH YOUR WAGES AND TO TO GARNISH YOUR WAGES AND TO REALLY THEN DECREASE YOUR INCOME REALLY THEN DECREASE YOUR INCOME SO STUDENT LOAN — SO STUDENT LOAN — >> TAKE CARE OF THAT FIRST.

>> TAKE CARE OF THAT FIRST. >> FIRST THAT. >> FIRST THAT. THEN IF YOU HAVE CREDIT CARD THEN IF YOU HAVE CREDIT CARD DEBT THAT NEEDS TO GO BECAUSE DEBT THAT NEEDS TO GO BECAUSE DEBT IS BONDAGE. DEBT IS BONDAGE. YOU GOT TO GET OUT OF THAT. YOU GOT TO GET OUT OF THAT. AND THEN YOU START WORKING, IF AND THEN YOU START WORKING, IF YOU’RE GOING TO STAY IN YOUR YOU’RE GOING TO STAY IN YOUR HOME FOR THE REST OF YOUR LIFE, HOME FOR THE REST OF YOUR LIFE, GET RID OF YOUR MORTGAGE GET RID OF YOUR MORTGAGE PAYMENT.

PAYMENT. >> I WANT TO FOLLOW UP ON THAT. >> I WANT TO FOLLOW UP ON THAT. YOU DON’T WANT TO HAVE A YOU DON’T WANT TO HAVE A MORTGAGE, A LIVE MORTGAGE STILL MORTGAGE, A LIVE MORTGAGE STILL GOING BY THE TIME YOU RETIRE. GOING BY THE TIME YOU RETIRE. WHY? WHY? >> BECAUSE YOUR MORTGAGE PAYMENT >> BECAUSE YOUR MORTGAGE PAYMENT IS YOUR HIGHEST MONTHLY EXPENSE IS YOUR HIGHEST MONTHLY EXPENSE THAT YOU’RE GOING TO HAVE BAR THAT YOU’RE GOING TO HAVE BAR NONE.

NONE. >> WHEN YOU RETIRE. >> WHEN YOU RETIRE. >> IT’S FAR EASIER TO PAY OFF >> IT’S FAR EASIER TO PAY OFF YOUR MORTGAGE THAN TO SAVER THE YOUR MORTGAGE THAN TO SAVER THE MONEY TO GENERATE THE INCOME TO MONEY TO GENERATE THE INCOME TO PAY OFF YOUR MORTGAGE. PAY OFF YOUR MORTGAGE. YOUR GOAL IN RETIREMENT IS TO BE YOUR GOAL IN RETIREMENT IS TO BE TOTALLY DEBT FREE 100% IN TOTALLY DEBT FREE 100% IN RETIREMENT. RETIREMENT. IF YOU DON’T HAVE ENOUGH MONEY, IF YOU DON’T HAVE ENOUGH MONEY, DECREASE YOUR EXPENSES, AND THEN DECREASE YOUR EXPENSES, AND THEN YOUR MONEY WILL GO FURTHER. YOUR MONEY WILL GO FURTHER. >> GOT YOU. >> GOT YOU. >> WHAT ABOUT WHEN, WHEN DO YOU >> WHAT ABOUT WHEN, WHEN DO YOU START? START? I KNOW, WHEN WE’RE BORN WE I KNOW, WHEN WE’RE BORN WE SHOULD START SAVING.

SHOULD START SAVING. >> YOU HAVE THE 200 BUCKS WHEN >> YOU HAVE THE 200 BUCKS WHEN YOU’RE 30. YOU’RE 30. >> PEOPLE ALWAYS THINK THEY HAVE >> PEOPLE ALWAYS THINK THEY HAVE TIME, TIME IS THE MOST IMPORTANT TIME, TIME IS THE MOST IMPORTANT INGREDIENT IN YOUR RETIREMENT INGREDIENT IN YOUR RETIREMENT RECIPE. RECIPE. LET’S JUST SAY YOU HAVE 40 LET’S JUST SAY YOU HAVE 40 YEARS. YEARS. YOU’RE YOUNG. YOU’RE YOUNG. YOU HAVE 40 YEARS UNTIL YOU’RE YOU HAVE 40 YEARS UNTIL YOU’RE GOING TO BE 70. GOING TO BE 70. YOU PUT $200 A MONTH AWAY INTO A YOU PUT $200 A MONTH AWAY INTO A ROTH IRA OR ROTH 401(k).

ROTH IRA OR ROTH 401(k). AVERAGE MARKET RETURNS, DO YOU AVERAGE MARKET RETURNS, DO YOU KNOW THAT YOU WOULD HAVE KNOW THAT YOU WOULD HAVE $1.1 MILLION AT 70, WHICH I $1.1 MILLION AT 70, WHICH I THINK SHOULD BE THE NEW THINK SHOULD BE THE NEW RETIREMENT AGE, BUT YOU WAIT TEN RETIREMENT AGE, BUT YOU WAIT TEN YEARS. YEARS. >> YOU’RE TALKING ABOUT HAVING A >> YOU’RE TALKING ABOUT HAVING A SURPLUS OF 200 BUCK WHEN IS SURPLUS OF 200 BUCK WHEN IS YOU’RE 30. YOU’RE 30. SHOULD YOU TAKE THAT 200 AND SHOULD YOU TAKE THAT 200 AND APPLY IT TO ONE OF THESE OTHER APPLY IT TO ONE OF THESE OTHER THINGS. THINGS. >> YOU NEED TO BE SAVING >> YOU NEED TO BE SAVING ESPECIALLY IN A 401(k), ESPECIALLY IN A 401(k), ESPECIALLY IF THEY MATCH YOUR ESPECIALLY IF THEY MATCH YOUR CONTRIBUTION. CONTRIBUTION. YOU PUT IN A DOLLAR, THEY GIVE YOU PUT IN A DOLLAR, THEY GIVE YOU $0.50. YOU $0.50. I DON’T CARE IF YOU HAVE ANY I DON’T CARE IF YOU HAVE ANY MONEY. MONEY. YOU CAN’T PASS UP FREE MONEY.

YOU CAN’T PASS UP FREE MONEY. IF YOU STARTED PUTTING, JUST IF YOU STARTED PUTTING, JUST LET’S SAY $200 A MONTH AWAY, AND LET’S SAY $200 A MONTH AWAY, AND YOU NOW ONLY HAVE 30 YEARS LEFT YOU NOW ONLY HAVE 30 YEARS LEFT VERSUS 40, YOU’D ONLY HAVE LIKE VERSUS 40, YOU’D ONLY HAVE LIKE $400,000. $400,000. YOU JUST BLEW $700,000 BECAUSE YOU JUST BLEW $700,000 BECAUSE YOU WAITED TEN YEARS. YOU WAITED TEN YEARS. IT WAS ONLY A $24,000 DIFFERENCE IT WAS ONLY A $24,000 DIFFERENCE IN THOSE TEN YEARS. IN THOSE TEN YEARS. BUT THE TEN YEARS, THE SOONER BUT THE TEN YEARS, THE SOONER YOU BEGIN, THE BETTER YOU’LL BE. YOU BEGIN, THE BETTER YOU’LL BE. >> JUST TO CARSON’S POINT. >> JUST TO CARSON’S POINT. IF I HAVE 200 BUCKS TO SPARE,KY IF I HAVE 200 BUCKS TO SPARE,KY CAN EITHER PAY OFF MY CREDIT CAN EITHER PAY OFF MY CREDIT CARD DEBT AND START SAVING IN A CARD DEBT AND START SAVING IN A ROTH IRA, WHAT WOULD MY CHOICE ROTH IRA, WHAT WOULD MY CHOICE BE? BE? >> YOUR CHOICE THERE IS TO PAY >> YOUR CHOICE THERE IS TO PAY OFF YOUR CREDIT CARD DEBT.

OFF YOUR CREDIT CARD DEBT. >> IF YOU DON’T HAVE MUCH MONEY >> IF YOU DON’T HAVE MUCH MONEY YOU MAY BE BEHIND ON YOUR CREDIT YOU MAY BE BEHIND ON YOUR CREDIT CARD PAYMENTS, AND YOUR INTEREST CARD PAYMENTS, AND YOUR INTEREST RATES ARE 15, 18%. RATES ARE 15, 18%. THAT’S A GUARANTEED RETURN. THAT’S A GUARANTEED RETURN. WHEN YOU PAY OFF YOUR CREDIT WHEN YOU PAY OFF YOUR CREDIT CARD DEBT, YOU’RE GUARANTEEING A CARD DEBT, YOU’RE GUARANTEEING A FANTASTIC RETURN. FANTASTIC RETURN. >> WHAT IS THE ONE SMALL THING >> WHAT IS THE ONE SMALL THING YOU WOULD TELL OUR VIEWERS YOU WOULD TELL OUR VIEWERS BEFORE WE GO? BEFORE WE GO? >> HERE’S WHAT’S REALLY >> HERE’S WHAT’S REALLY IMPORTANT. IMPORTANT. MANY PEOPLE HAVE ADVICE FOR ALL MANY PEOPLE HAVE ADVICE FOR ALL OF YOU. OF YOU. SOMETIMES THAT ADVICE IS GOOD SOMETIMES THAT ADVICE IS GOOD FOR THE PERSON GIVING THE FOR THE PERSON GIVING THE ADVICE, AND SOMETIMES IT’S GOOD ADVICE, AND SOMETIMES IT’S GOOD FOR THE PERSON RECEIVING IT.

FOR THE PERSON RECEIVING IT. MY ADVICE IS THIS, PLEASE DON’T MY ADVICE IS THIS, PLEASE DON’T DO ANYTHING THAT YOU DON’T DO ANYTHING THAT YOU DON’T UNDERSTAND. UNDERSTAND. IT IS BETTER TO DO NOTHING THAN IT IS BETTER TO DO NOTHING THAN TO DO SOMETHING YOU DO NOT TO DO SOMETHING YOU DO NOT UNDERSTAND BECAUSE SOMETIMES YOU UNDERSTAND BECAUSE SOMETIMES YOU CAN DO SOMETHING AND IT BLOWS CAN DO SOMETHING AND IT BLOWS ALL YOUR MONEY, AND SO IF IT ALL YOUR MONEY, AND SO IF IT DOESN’T FEEL RIGHT TO YOU, YOU DOESN’T FEEL RIGHT TO YOU, YOU HAVE TO TRUST YOURSELF MORE THAN HAVE TO TRUST YOURSELF MORE THAN YOU TRUST OTHERS.

YOU TRUST OTHERS. IT’S YOUR MONEY, AND WHAT IT’S YOUR MONEY, AND WHAT HAPPENS TO YOUR MONEY IS GOING HAPPENS TO YOUR MONEY IS GOING TO DIRECTLY AFFECT THE QUALITY TO DIRECTLY AFFECT THE QUALITY OF YOUR LIFE, NOT MY LIFE. OF YOUR LIFE, NOT MY LIFE. NOT ANYBODY ELSE’S LIFE, SO IF NOT ANYBODY ELSE’S LIFE, SO IF YOU REALLY WANT TO BE POWERFUL YOU REALLY WANT TO BE POWERFUL IN LIFE, YOU HAVE TO BE POWERFUL IN LIFE, YOU HAVE TO BE POWERFUL OVER YOUR OWN MONEY.

OVER YOUR OWN MONEY. >> THAT’S GOOD ADVICE. >> THAT’S GOOD ADVICE. IN SOME CASES FINANCIALLY DOING IN SOME CASES FINANCIALLY DOING NOTHING IS BETTER THAN MAKING A NOTHING IS BETTER THAN MAKING A CHOICE TO YOUR DETRIMENT. CHOICE TO YOUR DETRIMENT. >> NEVER TALK YOURSELF INTO >> NEVER TALK YOURSELF INTO TRUSTING ANYONE. TRUSTING ANYONE. YOU WALK INTO A FINANCIAL YOU WALK INTO A FINANCIAL ADVISER’S OFFICE AND THEY FEEL ADVISER’S OFFICE AND THEY FEEL LIKE THEY KNOW WHAT YOU’RE LIKE THEY KNOW WHAT YOU’RE DOING. DOING. THEY MUST KNOW, YOU DON’T KNOW THEY MUST KNOW, YOU DON’T KNOW AND YOU BELIEVE THEM. AND YOU BELIEVE THEM. SOMETIMES THEY GIVE GREAT AED SOMETIMES THEY GIVE GREAT AED VICE AND SOMETIMES THEY GIVE VICE AND SOMETIMES THEY GIVE ADVICE THAT’S NOT SO MUCH. ADVICE THAT’S NOT SO MUCH.

>> THAT STUFF’S TRUE IN >> THAT STUFF’S TRUE IN ANYTHING, RIGHT? ANYTHING, RIGHT? >> WHEN YOU THINK ABOUT IT, >> WHEN YOU THINK ABOUT IT, SAVANNAH, YOUR MONEY AND YOUR SAVANNAH, YOUR MONEY AND YOUR LIFE ARE ONE. LIFE ARE ONE. WHO YOU ARE AND WHAT YOU HAVE IS WHO YOU ARE AND WHAT YOU HAVE IS ONE. ONE. IT’S YOU’RE THE ONE WHO EARNS IT’S YOU’RE THE ONE WHO EARNS IT.

IT. YOU’RE THE ONE WHO INVESTS IT. YOU’RE THE ONE WHO INVESTS IT. YOU’RE THE ONE WHO SAVES IT, AND YOU’RE THE ONE WHO SAVES IT, AND YOU’RE THE ONE WHO’S GOING TO YOU’RE THE ONE WHO’S GOING TO LIVE. LIVE. >> WE’LL JUST GO TO YOU. >> WE’LL JUST GO TO YOU. YOU’RE OUR TRUSTED SOURCE. YOU’RE OUR TRUSTED SOURCE. >> COME ON, EVERYBODY, COME JOIN.

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Is 1 Crore Enough To Retire? How to plan your retirement?

Hi friends, welcome to Yadnya investment academy. We are going to talk about a topic of financial planning on Friday. And today's topic is very interesting. Because this question is asked regularly on many social media channels and workshops. That people have an amount in their mind that is 1 crore rupees. We think that if we have 1 crore rupees, our life will be good. So this question remains in the mind that if I have 1 crore rupees, can I retire now? Am I financially free? I don't have any tension of retirement now. Now whatever work I am doing is extra. So that 1 crore rupees is enough. And if you have retired now and got EPF money and total is 1 crore is it enough for you? And if it is enough or not, how much can you spend in both questions, when is enough and when is not. We will touch on all those things in this video. I will explain everything through a calculator. You can check that calculator on our website investyadnya.in as well. We cover many topics of financial planning in this session. If you want to make your own financial plan, then go to investyadnya.in website There are many products related to financial planning.

There are 1 to 1 sessions as well. You can check that out. Now I am going to my website and I am sure you can see my screen. If you go to the tool and calculator, here you can see the retirement calculator. I don't think you will get this anywhere else. Now the question is, suppose I have 1 crore rupees, is it enough for me to retire? First of all, I will be asked what is my age? I am just giving an example, 50.

Suppose I am 50 years old, what is my life expectancy? It is important to know when you will be retiring. I think we should keep it around 90. I am keeping it at 90. How much is the expense now? If you are retiring and you have 1 crore rupees, how much do you want to spend? What is your monthly or annual expense? Suppose I am thinking that I have 6 lakh rupees. I have put 6 lakh rupees here. How much inflation are you assuming? How much will my expenses increase every year? If India's inflation is around 6-7%, then you can assume that. Suppose 7% inflation till the end of life. Current asset, how much money do I have? I will put 1 crore rupees here. I have 1 crore rupees here. I will put that here.

How do you invest this 1 crore rupees? How much return will you be able to earn? This is a very important question. What type of investment do you want to put? Do you want to put it in PPF? Do you want to put it in Senior Citizen Savings Scheme? Or do you want to put it in FDs? Or do you want to create a portfolio of Mutual Funds like Hybrid Equity Funds? This is very important. Let's take all the scenarios. Suppose I want to put it in FDs. I don't want to do anything special.

I will get 7% return in FDs. Whatever is the post tax. Or whatever you think. You get 7.5% but let's keep 7% for calculation. Let's keep 7.5%. Let's keep 8%. We have put it in bonds, Senior Citizen Savings Scheme. And there is some money in EPF. So, we have kept some money in equity. So, my 8% will earn 1 crore rupees corpus. Which is 1% over inflation. I have taken 7% inflation and 8% returns.

I have to put these 6 fields first. If I submit this, My retirement corpus is in deficit of 1 crore. This means that I need 1 crore more to develop this scenario. If I am 50 years old and I have 6 lakhs per month. And 7% inflation. And 8% growth. I need 2 crores. 1 crore is not enough. Now, let's change the scenario. What should I do if I am not able to do it.

I can either reduce it. I don't spend Rs 50,000 per month. I can do 30,000. Then we can change the amount. We have done 36,000. And then we have put this change. So, 21 lakhs is still less. So, basically it will come to 3 lakhs. So, now our retirement corpus is only 67,000 less. So, I can spend 3 lakhs per year. If I can spend Rs 25,000 per month. And if I take 7% inflation. And 8% growth. Then 1 crore is enough in 50. If I spend 25,000. If I spend 50,000 with same scenario. Then I will need 1 crore. Now, you will say that I invest in mutual funds. I know investing well. And I think that my corpus can earn 10%. If 7% is inflation. Then I think that my corpus can earn 10% per annum.

Like our approach. You must have seen many videos on retirement. If you want to understand anything. Then put it in the comment section. If I think that I can do 10%. So, let's try it on 6% after spending 3 lakhs. So, now our corpus will be 47 lakhs. So, it means that I can spend 4 lakhs or 4.5 lakhs. So, 4.2 or 4.3. Means I can spend around Rs 35,000 per month. If I can earn 10% return. Now, you will say that I have already retired. I am 60 years old. And now tell me what is this scenario. So, in that I can spend 50,000 per month. So, in 60 years also if you are earning 10% return. Then there is a deficit of 24 lakhs. If this scenario plays. You say that I have inflation. I don't spend much.

50,000 per month. Next year, I will grow according to 5%. Then it is good. 5% inflation, 10% rate of return, 1 crore rupees. You have enough. You have just enough. So, you can spend 50,000 per month. If you are 60 years old, you will get that money for 90 years. Now, there is one more thing. Many people think that I have a pension. I have a house. He is giving rental. Or I am getting pension. Suppose you are getting pension of Rs 10,000 per month. Means it comes more than that. But I think 10,000 per month. So, I am getting a pension of 1,20,000. And we will make it 7 again.

Is there any growth of pension? It seems that 2-3% growth is there. So, let's grow it by 3%. Till when will the pension come? Will it come till 90? Will it come till life expectancy or will it come soon? Many times, for limited time, money is going to come. So, we sell those things. Rental is going to come. I have to sell that house after 10 years. So, you can put that also. So, I have to get pension till last. Till 90. So, then in 6 lakhs, 7% inflation, 1 crore, 10% and all. So, then almost I am there. Means 3 lakhs is the only deficit left. So, in this way, you can find out that the money you have, is it enough for your retirement? So, now you can change the amount.

If you have 2 crore, 3 crore or 50 lakhs, then you can change the amount. Accordingly, you can find out how much expense I will have after retirement, my work will go smoothly till life expectancy which I have planned. So, this will be very very helpful for you. So, if you like Calculator, then do share this video with everyone. I think this will be very helpful to many people in retirement planning. And from the perspective of financial freedom also. And if you want our financial plans and personalized approach, if you want to understand how to get 10% rate of return, or what all I can do after retirement, then you can go to our website and call our customer service, sales team or relationship team. You can WhatsApp or call or email. And then we will reach out to you and we will surely try to help you on those things.

That is all I have. I hope, do subscribe more. Because the topics of financial planning are not going on much. So, do subscribe and like the video if you like it. Have a great time, friends. Jai Hind..

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Step 1 to Putting Together a Good Retirement Plan

[Music] what do you think is the first step in putting together a good retirement plan a lot of people start by looking at how much they have saved and thinking about how they're going to get that money out but that is not the first step to a good retirement plan your first step is to think about what you want your retirement to look like what is your retirement going to look like what are you going to spend money on what are you going to be doing in retirement how long is your retirement going to last that's your first step and you want to think about three different phases of retirement number one is the go- go years this is when you're first retired and you're active and you're going so you want to consider what do you want to be doing during that period of time do you want to travel do you want to travel over seas or get an RV do you want to travel to see grandkids that live in different places of the country how do you want to be spending your time the second phase is going to be the slowo years so once you've done and gone and and enjoyed a lot of retirement you'll just move into those slowo years and you'll be going and doing less probably spending less but you need to consider what is that going to look like for you are you going to still be living in the same house or do you want to downsize do you want to be closer to family what is that period of time going to look like and what will you be spending your money on and then the last phase is the no-o years and this is when you've reached the end of your retirement years and you're not going and doing because you can't go and do as much as you did before you may even need help you might need help with assisted activities of daily living you might need some assistance uh with Mobility with grocery shopping a lot of different areas that you could need more help with you may even need to be in a facility because of some Dementia or some other health issues so you want to think about that and think about where you would be living at that point in time and what that would cost so that you know what your retirement savings needs to cover so you take the total of all of those the early years where you're going and going and going those go- go years the middle years where you're not going as much you're probably not spending as much and then those later years where you may need more help you may be spending more money where you going to be how long are those going to last and what might you spend and putting that together that allows you to build the foundation of your plan now we're going to talk about that more in the next video so please subscribe to this channel if you don't want to miss it I don't want you to miss it because I want you to be on your best path for your retirement [Music]

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RATE OF RETURN: What To Expect in Retirement.

Rate of return is a function of risk. It's kind 
of unique to each individual. We have a metric or   a gauge that we think certain retirees should be 
at. The level of risk is really unique. There is   a balance to not wanting to take too much risk 
because it's great to make a greater return,   but in markets like this, it's a lot 
harder to stomach the losses. Whereas,   if you have a well-balanced portfolio you 
may not make as much in the up markets but   it certainly softens these down markets. So, 
as much as we want to say there's one specific   rate of return like, five percent should be 
my rate of return or seven percent should   be my rate of return.

It really is a function of 
someone's risk and unique to them as an investor.   As far as the ranges of rates 
of return and retirement,   it should be somewhere between four 
and a half to eight percent. Again,   the more aggressive you are you could target 
that eight percent rate of return you just   have to expect more volatility and more 
price change in your portfolio. The lower   the rate of return expectation, the less 
volatility someone should experience. Which   is again a smoother path into retirement 
it just might mean you don't make as much.

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Financial advice for retirement: On Your Side

INVESTIGATION INTO THE CONTAMINATION SINCE THE FACTORIES IN ECUADOR. STARTING TO PLAN FOR YOUR FINANCIAL FUTURE IS ONE OF YOUR NEW YEAR'S RESOLUTIONS, WE HAVE SOME HELP FOR YOU. >> A FINANCIAL EXPERT THAT HAS SOME TIPS YOU SHOULD KNOW ABOUT. >> IT IS A REALLY GOOD RESOLUTION TO HAVE. TO SAVE INSTEAD OF JUST SPENT. I AM JOINED BY CEO TERRY KENNEDY THANK YOU FOR JOINING US. I FIRST WANT TO TALK ABOUT PENSIONS. AND A LOT OF PEOPLE DON'T UNDERSTAND HOW THEY WORK. YOU ARE SAYING NOW IS THE TIME TO FIGURE IT IS THE PENSION SYTEM IS BROKEN. IT'S BEEN BROKEN A LOT OF TIME. THEY HAD TO PULL BACK WHAT THEY ARE GIVING PEOPLE. PEOPLE NEED TO BE EDUCATED ON THEIR PENSION, WHAT THEY DO HAVE SO THEY CAN SAVE ON THEIR OWN. >> CAN YOU EXPLAIN WHAT YOU SHOULD BE DOING THIS FINAL WEEK BEFORE JANUARY 1.

>> IF YOU DON'T HAVE AN ADVISOR, I WOULD GO FIND ONE. SOMEONE THAT CAN HELP YOU. I WOULD SAY GO FIND SOMEBODY. YOU START SAVING AS SOON AS POSSIBLE. YOU NEED GOOD TIMES ON YOUR SIDE IF YOU SAY. I LOOK AT MY BUDGET RIGHT AWAY AND SAY HOW CAN I TIGHTEN UP A LITTLE BIT AND NOT SPEND SO MUCH >> GET YOURSELF AN ADVISOR. START SAVING AS SOON AS POSSIBLE COMPOUNDING INTEREST IS ON YOUR SIDE, LIKE I SAID. THREE, TIGHTEN UP YOUR BUDGET. MAKE SURE YOU GET INTO SAVE MONEY STRATEGY SO YOU DON'T LOSE MONEY. LOSING MONEY ACTUALLY HURTS WORSE THAN MAKING MONEY.

>> 250,000 TEACHERS NATIONWIDE. POTENTIALLY LOSING 40-50% OF THEIR INCOME IF THEY DON'T TAKE SOME PROACTIVE STEPS. >> PAYING OUT 50% NATIONWIDE. SAY YOU ARE MAKING $80,000 A YEAR, IMMEDIATELY GO TO 48,000 AND YOU ARE RETIRED, THAT HURTS. YOU NEED TO SAVE UP SO YOU CAN DRAW FROM THAT TO PUTT WITH YOUR PENSION. >> ALONG THE LINES OF TALKING ABOUT TEACHERS, YOU ALSO HAVE A NONPROFIT THAT GOES INTO UNDERSERVED SCHOOLS. DOES A LOT OF VACATION PROJECTS. I KNOW YOU HAVE DONE STUFF WITH LAUSD WHILE YOU ARE HERE. CAN YOU TELL US A LITTLE BIT ABOUT THAT.

THEY DON'T KNOW WHERE THEY WANT TO GIVE HER WHAT THEY WANT TO DONATE TO. >> APPRECIATION AMBASSADORS. WE GO TO THE SCHOOLS. WE DO THINGS LIKE LANDSCAPING, PAINTING. WE'VE DONE SOME COOL ART MURALS. WE'VE DONE BASKETBALL COURTS AND BASEBALL DIAMONDS AND ALL KINDS OF STUFF. WHEN THE KIDS COME IN, IT IS THE MOST AMAZING THING TO SEE THEIR EYES. WE HAVE NOW BEAUTIFIED THEIR SCHOOL. WE DO IT WHILE THEY ARE NOT THERE AND IT JUST UPLIFTS THE WHOLE PLACE. >> WE HAVE ONE MORE WEEK LEFT IN THIS YEAR. IS THIS A GOOD TIME IF YOU HAVE A LITTLE EXTRA MONEY TO DONATE IT AND THEY GET THE TAX INCENTIVES? >> ABSOLUTELY. YOU DON'T GET THE YEAR TO DONATE AND TAKE THE DEDUCTIONS..

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Retirement Planning During Bear Markets – Especially if It’s Your First One In Retirement

bear markets can feel a lot different when you're retired and you're no longer earning income from work especially if this is your first bear Market since you stopped working when you were younger you know you had time on your side you know you may have even seen drops in the market as an opportunity because it gave you additional time and you got to purchase more shares well things were on sale so to speak but now most likely that's not the case the relationship between our money and our accounts now are of money going out versus money going in to put it simply and plus you may have noticed that there's this psychological component now around money and not wanting to mess things up because the decisions we make really carried much more weight now when we're close to or in retirement and it's really that's not only psychological or emotional it's true because planning the distributions is much more complex than the the planning around around saving and putting money into the investment accounts what led to our investment success the last 30 years is a lot different than what's going to lead to success the next 20 or 30 years or at last that's at least what we've been seeing at streamline Financial since 1998 since we've been around so I want to share how to endure through bad markets if you're close to retirement or you're already retired and then what you can do to actually take advantage of of this even if you're already retired and you're no longer saving money and we're going to do that because we know a universal law of physics that can't be disproven and we can actually apply it to our retirement and make it a little bit better if you're thinking Dave what the heck are you talking about here's a brief explanation so Newton's third law of motion is that every action there's an equal and opposite reaction right you've heard that before so the way that I see it is there's a positive to every negative and the same thing there's a negative to every positive it's the law of polarity so I want to share what the positive is to take advantage of during bad markets and by the way if I haven't met you yet I'm Dave zoller and Tim and Luke and I and Sean we run streamline Financial it's a retirement planning firm and we've been around like I had said since 98 so we've seen clients really go through it all the.com bust the financial crisis and then covet and then all the things in between all those uh you know those mini panics that we've had so we created this channel to share what's working and what has worked for them and so that you can hopefully glean some wisdom from them and then apply it to your your own life so the first thing we need to be aware of is that the previous 30 years there were four bear Market Corrections so that's a drop of 20 or more and then the 30 years before that there was a total of five bear Market Corrections so the main takeaway is we need to expect these bear markets to happen during our retirement during that next 20 30 years right the second thing is we don't want to make a change solely on an emotion right and it's not not just making a drastic change like selling everything and putting everything under the mattress right it's we were just talking to someone yesterday and emotions can cause us not to take an action when we know doing so is actually the Smart Financial thing to do for instance during March of 2020 when it wasn't easy to rebalance your accounts it was very difficult to do but if you did follow through and and do the correct rebalancing system or strategy if you were looking back now it could have made a lot of sense the third thing is update your income plan because that helps guide us and make really good planning decisions around our investment plan so it's really start with the income plan you've heard that before and that helps us make the investment decisions versus the other way around and updating your income plan during bad markets that can also give you some confidence as well as you're looking at where we are today and then looking at over the next few years and and seeing that things maybe aren't as bad as it might seem at least when you've got those two things of the unknown and then the known updating the plan is the known and you can get a little bit better picture on what the future might look like for you now to the two things that maybe could give us an advantage during a time like this this is back to the law of polarity so the possible things that we might be able to use here are well first before I say it as always this is not specific advice to you so we're not looking at your your plan together so before you do anything just talk to a financial professional but idea number one to think about is tax loss harvesting that could be a way to write off some of the losses while still keeping your investment strategy intact and I talk about this concept a lot more in other videos so I'm not going to go into details on it today but just keep that in mind the one thing to to really pay attention to though when we're we're talking about the law or talking about tax loss harvesting is that wash sale rule right so look for the other videos or talk to that Financial professional before thinking about doing that the second thing that could be a possible opportunity for really the first time in a very long time is that ability or option to lock in higher yields in that conservative bucket as you know the the bucket strategy you've seen that before where we've got the possible three buckets and having that conservative bucket here is a great way to plan out and prepare for for bad markets and now at the time of this recording some of those historically conservative asset classes are paying a higher interest a higher yield than what we've seen really over the last decade which could be a silver lining during this period of time so those are just two things possible things to look at which maybe could be taken advantage of by you for for your benefit so those are just two things to think about during this period of time that we're in right now if that short video was helpful please like this and then share it with others if you think it could help them too and if you'd like to talk more about your plan feel free to reach out to me in the in the description below or go to our website streamlinedplanning.com for get you click on the get started button we don't always have space available but you'll hear back from me either way so I hope that was helpful and then I'll see you in the next video

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Average Retirement Savings by Age 60. Are You Almost Ready to Retire?!?

In this video I'm going to show you three 
things, what the average retirement savings is   for a 60-year-old if you're comparing that 
60-year-old against a population of savers,   I'm going to show you that same number if 
you add in the-non savers in this country,   and I'm also going to show you what you 
should have at 60 years old to retire   in the same lifestyle that you're living 
right now. Coming up next on Holy Schmidt. Holy Schmidt. So you're 60 years old, five to seven years 
out from retirement, maybe a little bit more   because of the pandemic that we're all in right 
now and you want to know where you should be.   Well, that's a very good question. And it's a 
very complicated question because the pool of   60-year-olds spans the gamut from those that have 
saved virtually every penny they've made up until   this point in their life to those that have had 
massive financial obligations, are deep in debt,   and don't have a dime and everything in between. 
So let's talk about each one of these categories.   First, let's talk about the average retirement 
savings for a 60-year-old when you're comparing   that 60-year-old amongst a group of savers. 
This number comes directly from the Fidelity   401(k) balances and it's quite accurate, it's 
a good representation of where folks are.

Now, I want to point out two things. First, the 
difference between average and median. Let's say   you have five different 60-year-olds 
and in their 401(k) one had $700,000,   one had $100,000, the next one had $61,450, number 
four had $45,000 and number five had $17,550.   This totals $924,000 amongst those five 401(k) 
participants. And that gives an average balance   of $195,500. Now, even though I'm showing 
you five balances here I could have easily   have shown you 55,000 or 5 million and it 
would have looked very similar to this. The average balance for a 
60-year-old in their 401(k)   is 195,500 and the median balance is 61,450. So 
let's write these down. Average, 195.5K, median,   61,450. There are many, many problems with this 
information.

If you went to fidelity.com and you   got this information, and that's where it 
came from, most people watching this video   would just call it a day. They'd say, "There's 
no chance I'm going to live well in retirement."   That's because retirement funds like Fidelity, 
Vanguard, et cetera, have a very strong interest   in you depositing more into your account, which 
is of course good for you, but it's also good   for them. So let's take this information, I'm 
just going to tell you what it actually means. The average balance of $195,500 is comprised of 
a few, very, very large balances at the top. The   flip side is this right here, 81% of Americans 
have less than $5,000 in savings. The problem is   this number right here, the $700,000, we'll call 
those the trust fund and super saver 60-year olds.   Some didn't have the same bills that you might've 
had. Others lived very spartan and saved more than   most. , Maybe they lived at home until they were 
50, who knows? But they were able to sock away a   lot of money but they don't represent the masses, 
but they do skew the number of the average way up.   This number, the median is the number that's more 
important here because this is the more accurate   representation of where you probably should 
be if your average is $61,450 in your 401(k).

Now, what happens if you overlay this population 
right here? 81% of Americans have less than $5,000   in their 401(k), 81%. So that brings these 
numbers way down, in fact, the actual numbers   when you factor in the non-savers are 
an average of $39,191 and a median of   $15,725. 81% of the population has almost nothing. 
When you add that in 39,191 is the average and the   median is 15,725. The question is, what should 
you have? Well, they'll tell you it's 8X,   8X your current salary.

So if you make 
$50,000 a year you should have $400,000. And before you shut the video off and pretend like 
you didn't turn it on, let's talk about this. This   assumes two things. One, it assumes that you 
get a rate of return of six and half percent   while you're working and 5% after, but more 
importantly it assumes that you have the same   exact expenses when you retire and therefore need 
the same exact income that you're making today.   The fact of the matter is when you retire you 
won't have an endless mortgage that you need   to pay off, you won't have college education 
for your kids.

You may have already paid for   your child's wedding. You might have already 
taken the funds that you needed to set aside   to care for an elderly parent or a relative in 
need and put those aside and dealt with that.   So at 65 years old a lot of your expenses that 
you are paying for right now may or may not exist.   Certainly by the time you get to 70, 75, 80, 
those expenses are going to drop way down. So, while they say you should have 8X for your 
savings in order to achieve the same income   that you have now in retirement at six and a half 
percent, I actually think for many people the   numbers are about half that, as little 
as 4X. So don't worry if you don't have   8X, you can't change the past.

Don't even worry if 
you don't have 4X, if you don't have 195 thousand,   or even 15 thousand because there are 
things you can do now and even in retirement   to help your income go up or expenses go down. 
We'll talk about those in an upcoming video. If you like this video, please give it a thumbs 
up so that other people can find it as well. Also   don't forget to click subscribe and notifications 
down below and that will alert you the next   time I post a video, I try to post them twice a 
week.

This is Jeff Schmidt, thanks for watching..

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Welcome to About Retirement – financial & retirement advice and tips

Hello, it is great to see here.
You are in the right place if you are preparing yourself for retirement in another five
to ten years, if you already retired if you are single again either due divorce late in your life or sadly your partner passed away, and if you are looking for ideas, suggestions
or strategies how to improve your financial position, how to save smarter, how to create financial security in retirement, how to create a secure income for life,
to have the retirement you always wanted. My goal is to make the financial complexity
less complex, more digestible and maybe even enjoyable. And give you suggestions how
we can improve your financial position no matter your age or status. My name is Katherine, as a migrant to Australia
and a person who had endured a lot of financial drama and abuse I had decided to study finance to be able to survive, which in turn led me to an exciting career
in financial planning After 20 years of working in this profession
I am just as much or maybe even more passionate about helping people reaching the best version of financial freedom, and they dream retirement.

So I invite you to connect with me here. SUBSCRIBE to my YouTube channel, CHECK out my website, where I present a lot of very useful information. So that's it from me. Don't forget to hit that SUBSCRIBE
button and let's stay connected..

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2 Early Milestones in the Game of Retirement Life

Loren the Game of Life it came out 
in 1960. A board game that you had   in your household growing up? Most definitely we  played lot of games growing up and this is one 
of them. Okay so today what we want to do is we   want to go through the milestones of life we're 
kind of going to do it in numbers. So in a way   we're taking some liberties here the board game is 
like a series of numbers as you move through life.   And as we specifically talk about moving to and 
through retirement what we want to do is give   you strategies give you tips gives you things you 
should be talking to a retirement planner about.   And we'll have a little fun with the Game of Life
along the way.

But we should first talk about how we look at every retirement whether you come 
talk with you Loren if you're 55 or 75. We apply five guiding principles to your retirement 
to help you win the game of life. Yeah there's two   distinct phases of life there's accumulation years 
then there's the retirement years. And when it   comes to those retirement years that's when it's 
important to really start to get organized in the   form of retirement plan. And in that retirement 
plan there are five guiding principles. When   you retire you still need income your W-2 wages 
go away where's the income going to come from?   When you take income you're still going to have to 
pay taxes there's long-term care Medicare planning   legacy planning and then of course the fifth one 
is the investment planning principle. Okay so we   have our cars this is the cutest little thing I've 
got six people in my car because I've got four   children and my husband in here. Loren has his 
daughter Jace and the little dog Coco no Mocha,   Mocha is in the car with Loren.

So Loren like I 
said we're gonna have a little fun with this. Why   don't you spin once for the first time and then 
we won't spin to continue. But we'll get started   on our game. Oh two, alright Loren gets started on 
two. Would you like me to take the, goes he goes   two. And let's draw a card just fun so we can kind 
of refresh ourselves on what the cards are for the   Game of Life. I'll draw the card, I'll answer the 
first one. Alright you go first. Ah get a pool,   I like this first card you probably like that 
Jace would like to get a pool as well. So it says   pay the bank $50,000. Wow, pools are expensive. 
Well, that sounds a lot like today's prices.

So   that's the first stop or the first card that we've 
picked on the game of life. Now the first stop on   your journey to and through retirement as we 
pull the numbers kind of on your board game   is age 50. So you're going through the game of 
life you hit age 50. What should you be thinking   about in terms of retirement? From a retirement 
planning standpoint age 50 is a milestone.   A big portion of this milestone is now you're able 
to contribute more towards your retirement savings   than what you've ever been able to do before. 
If you're under age 50 into your IRA the max   you can contribute is $6,000 but at age 50 you 
have a thousand dollar catch-up contribution.   So a total now of $7,000 but here's 
where the real fun comes into play.  At age 50 is through your employer sponsor plans 
your 401k plans. Before age 50 you could only   contribute up to $19,500 you get an extra $6,500 
contribution bonus if you will. Once you obtain   age 50 for a total contribution of $26,000. So 
now if you're age 50 or beyond you can actually   contribute the max to your 401k plan.

And if you 
qualify from an income standpoint also you can   contribute the max to your IRA. So, the 7,000 plus 
the 26.5 now you can start saving for retirement   and accumulate that wealth a lot more quicker. 
And you ever have conversations with people about   you know is it usually a no-brainer contribute 
that 6,500 or do they have to look at all the   other moving pieces in their life too. Because at 
50 I know I'll still have kids at home, a lot of   people still have kids at home so that 6,500 feels 
like a lot of money. It does feel like a lot of   money and so it's different for everybody. In each 
one of these milestones that we talk about here on   this on this show. The outcomes or the strategies 
that you incorporate with it will be different   for everybody. And that's the necessity of a 
customized written plan as you make the transition   from the working years to the retirement years. 
Your life your circumstances your resources that   you have your cash flow is different than most 
other people.

So your plan needs to be customized   to your circumstance. Okay I have to spin I 
know I cannot spin a two that's not hard to do,   I got three okay I'm gonna take the bus here 
go with me and the four kids we got three. Alright here we go, promotion! 
Your hard work paid off spin again.   So a promotion obviously is a real piece of 
retirement and the nice thing about a promotion is   maybe you can contribute a little bit more to 
that 401k or or do a little bit more retirement   planning as those promotions come along so.

Let's 
talk about our next stop on the game of life   retirement style and it's age 55. What do we need 
to know there? Age 55 is an important milestone   because now if you separate service from your 
employer and you have an employer-sponsored plan   now you have penalty free withdrawal privilege. 
And this is a very little known loophole as it   relates to these employer-sponsored plans. So, 
if you're working with your employer you're 56   years old you retire or you get laid off or you 
just decide hey i'm going to go somewhere else   if you take your distributions from that employer 
plan you will not have to pay that 10% penalty   even though you're under age 59 and a half. So a 
lot of people think 59 and a half I take money out   of my retirement plan I'm going to be imposed 
that 10% penalty but if you take it after you   separate service post 55 from that employer plan 
you don't have that 10% penalty.

And when you say   take it can you take it all at once is that the 
best strategy typically or do you want to spread   that out? Well there's a couple different things 
that goes into that. Let's say you can take it   all once so if you have $200,000 underneath your 
employer plan your 56 you leave that employer.   You can take that full $200,000 out but if it's 
pre-tax money meaning it's never been taxed before   it's going to jump you up into a tax bracket that 
is ugly.

So even though you can, you may not want.   So you can't put it in an IRA or something right 
away? You can put it into an IRA but once you do   so now that money lives underneath the IRA rules. 
Which means you cannot take it out until 59 and   a half without the 10% penalty so here's where a 
lot of the planning will come into play especially   if you want to retire prior to 59 and a half. 
Is you may choose to leave that $200,000 there   maybe you have some other IRA money that you know 
you're not going to use until post 59 and a half   or you can say between 56 and 59 and a half you're 
only going to need a 100,000 of that so many times   the employer's plan will allow you to roll the 
100,000 keep a 100,000 there and then you can   use that for the penalty free cash flow.

Thank you 
for watching this clip of retiring today and don't   forget to subscribe. If you have questions
about your retirement plan, take advantage   of the complimentary 15-minute 
retirement checkup phone call..

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2 Ways to Estimate Retirement Spending

When you're planning for retirement, your spending level is one of the most important pieces of the puzzle, so how much should you plan to spend each year? That's going to dictate what we are withdrawing from your investments and how that needs to supplement your Social Security, pensions, and that sort of thing. So we're going to go over two methods that you can use to fairly easily figure out what your spending might look like in retirement. As you go through this exercise, it's important to remember that no method is perfect and it's impossible to predict the future, so we don't know what your grocery bill is going to be in 14 years, or how much you'll spend on electricity in 12 years, but what we can do is make some reasonable guesses and estimates and take action based on that, take a step forward and then learn a few things and then adjust if adjustments need to be made.

So the two ways of figuring out your budget I want to talk about today are the top down and the bottom up approach, and there are a couple of other ways to estimate your retirement spending need as well. So the replacement ratio is a pretty popular one, and that's where you say, I might need, let's say, 80% or some other percentage of my current income to spend in retirement, hopefully it's a relatively high number, but there…

You're just basically saying, Well, I'm not going to save for retirement anymore, I'm not going to be paying payroll taxes, so maybe 80 90 or some other percentage is an appropriate amount, but we're going to go over again, top down and Bottom up, so starting with top down, the top down strategy focuses on the amount you spend and is not as concerned with the destination of those dollars or the specific costs that you pay, all that that information is important, and we're probably going to want it, but when we look at a top down approach, we say, What is all of the income minus the savings you do? And the answer is your costs or your total spending, so we don't know necessarily exactly where that money went, but it went somewhere… Okay, so you had income, you save some money in some different places, the rest of it went away and it's not your money anymore, so that's the top down approach, so how do we figure out the income? The best place or the very top is to start with your pay stubs or your income tax returns, so those are going to capture even dollars that never hit your bank account, so for example, you can say, my total income is X, but I put money into my workplace plan, my 401k, that money is never going to show up in your bank account, you're not going to see it as a line item in your transactions where you saved money, but you did indeed save that money, you didn't spend it on something else, you can spend it later, so if we start with the income sources from a very high level, we're talking about your pay stubs and your tax returns, then we look at the savings, so this is going to be all of the additions you make to various accounts, so that's going to be your 401K, 403B, any bank savings accounts, HSAs, IRAS, any place that you're saving money for the future, this is going to get subtracted from that income number we came up with, so we have our income at a high level, we have the savings that we did, we subtract that, then the result is the total spending, and again, we're not totally concerned with exactly where the money went.

Although if there is a problem, a spending issue or something like that, then we definitely want to look closer. Naturally, there are pros and cons of any approach, so the advantages of this top down strategy are going to be that it's really easy and it gives you a big picture view, and it captures really pretty much everything, it might capture too much, so we'll talk about that in a second, but if you are not sure exactly where your money goes, but you're doing okay budget wise, and you want to keep the same lifestyle basically that you currently have, then this can be a decent way to estimate how much you might spend later in life, so we don't know how much of it went on vacation versus dining versus whatever, but you did spend the money somewhere, and that's really what we need to know is how much do you spend…

But this could capture some costs that you aren't going to have in retirement, so for example, your payroll taxes are going to be something that we want to think about if we're using this top down approach, because when you stop working, you'll no longer have those payroll taxes. Likewise, if you have a mortgage and you're doing monthly mortgage payments at some point that loan might go away and that won't be an expense for you in retirement, you would generally still have taxes and insurance, but you wouldn't have the principal and interest portion of your mortgage payment at some point down the road, hopefully. So again, with top down, we start with this big picture view, income minus savings equals expenses, and then maybe we want to make some adjustments for certain things that are going to change over time, so here's a little example of how it looks visually, you've got your income of 100,000 you're over age 50, you're doing 27,000 into your 401K, you've got an IRA as well, there's another 7,000 that you're saving.

And so your actual spending is no more than 66,000, and it's probably even less than that when we think about payroll taxes and maybe a couple of other things, so think about this as you evaluate what your costs might be, sometimes people think I make 100,000 right now, so I'm going to need a 100000 of income every year in retirement, and that's often not the case, and this is another way to illustrate that point, in fact, those are the types of exercises I often go through with clients, by the way, I'm Justin. Pritchard, and I help people plan for retirement and invest for the future, so in the description below, there's going to be more on this topic, on your spending and just some other general retirement planning type resources that I think will be really helpful for you. So please check those out, and it's also a good time for a friendly reminder that this is just general information, it's a short video that can't possibly cover everything, so please check with some experts before you make some important decisions.

Next, we have the bottom up approach, and so this is going to be what you might be more familiar with as just budgeting, so that's looking at every single expense and transaction and categorizing those costs and figuring out where exactly your money goes. So you're really looking closely at the destination of each dollar that leaves your household, so you have a detailed view of what's happening, you can get this information from places like your credit card statement, so every time you spend money, there's an electronic record of it. You can categorize that and track it, your bank account is also probably a good place to look, so if you have those electronic automatic payments that go out of your bank account, maybe your mortgage or your insurance payments, that kind of thing…

Those are going to be important to know about and include in your budget. Even a check register. So you might only write one or two checks a year these days, but they're probably big ones and they're probably important to know about, so make sure you're tracking that if it's a charitable contributions, or maybe you pay your property taxes once a year by check, that sort of thing, we need to know about those so that you can continue that type of spending. This technique really relies on you being able to track and find and categorize that information, so it's probably a decent idea to just cross check this with a top down approach, so say, Well, here's what I think I spend based on my budget, based on all the things I tracked and looked at, but let's just see if that more or less adds up based on my income versus how much I put into different accounts, and are we in the ballpark? Just like with the top down approach, it's important to pay attention to any costs that might change over time.

So if you are making mortgage payments again and you're going to have that loan paid off at some point, want to look at what's the principal and interest portion of that payment, and what's the taxes and insurance portion, and keep those separated, you know that you'll continue to pay taxes and insurance, but not the principal and interest at some point down the road. Again, there are pros and cons to this, just like everything else, it's probably a decent way to go if you are very close to retirement because you're going to be spending in a similar way next year or two years from now, as you are today, so your current budget might be a nice reflection of what the next couple of years budget could look like, one of the drawbacks though, is that this can give you a false sense of precision, so you've got your list and your spreadsheet and you've got you exactly how much you paid for a bagel eight months ago, and you know exactly where your money is going, but you might be missing something, that's really the main risk is that you could be missing some important expenses, so that if you base your spending off of your spreadsheet or your list, it might not be nearly as accurate as you think it is.

So I hope you found that helpful. If you did, please leave a quick thumbs up. Thank you and take care..

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