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Early Retirement Success Story – How He Saved 12 Crores in His 30s | Fix Your Finance Ep 36
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
If you want to retire early, then this video
is for you. Today we'll meet a man who has a corpus of
more than 10 crores and has managed to retire completely before
the age of 40. We will learn how to start planning, how to
do the calculations for early retirement and what all things to keep in mind before
leaving your job. So watch this video till the end and to support
our channel, like the video right now.
FIX YOUR FINANCE Hello and welcome to a new episode of Fix
Your Finance. Today I have Ravi Handa with me. Welcome to the show Ravi. Glad to be here. How's early retirement treating you? It has its good parts obviously. What are the good parts? You can spend time on things which you were
not able to do earlier. And what are some of the bad parts of retiring
early? You lose a lot of value and a lot of validation
that you used to get from a job. You have described your retired life in 2023.
Let's take it back to like 15-16 years back. So, what did you study? I have done engineering in computer science. And what was your first job? Where did you start working? I started working in the education sector
itself. I joined IMS Calcutta which is a CAT coaching
company. Okay. And what was your first paycheck? 25,000 odd rupees. When you retired in 2022, what were you doing
back then? Actually, before that, I used to run a business
from 2012 to 2021. Which was in the education sector. My company was acquired by Unacademy. So, the last 1-1.5 years of my working career, I was with Unacademy as director content sales. So, how many years did you work? I worked from 2006 to 2010. Then I took a year break. 2011 is when I got married. 2011 is when I joined this IT company called
Mindtical.
What was the trigger to start your own thing? When I was working for IMS, at that point of time itself, I started making educational videos on YouTube
around 2008. Gradually, they became popular. Not very popular. And this was CAT coaching for MBA? CAT coaching. First, I started with math. Then I went to GK through math. Then to LRDI, then to English.
I kept on expanding. And how was the business? How did it work? Business was profitable from day one. Because there was no expense. Yes. In today's date, the cost of videos or ads
in EdTech has gone astronomically. In 2012, it was extremely simple. Because I don't think anyone was doing it. Or even if anyone was doing it, they were not such a big player that you cannot
really compete.
On an average, what was the kind of profits
or salary that you guys were drawing? We had good years when we did revenues of
3 crores as well. We had bad years when we did revenues of 25
lakhs as well. There was massive fluctuation. In 2021, your company got acquired. Correct. It got acquired and then there was that vesting
period wherein you had to work. Correct. And after that, you got an exit. Correct. So, were you actively looking for an exit? Yes. Again, I am telling you the same. So, during the COVID period of 2020, my wife was pregnant at that point of time, So, my wife and I used to sit and chat about
what to do with life. And this is what emerged that we have to sell the business at whatever valuation possible, whatever sort
of deal you get. Because getting out of business is the priority. After selling the company, there will be a
vesting period wherein you were working with Unacademy.
Correct. What was your compensation then? Exact numbers I can't reveal because of the
NDA. But my salary was a little above 1 cr. And the ESOPs of the vesting, that was another additional 50 lakhs or a
little more than that. Wow! So, you have a lot of money in Edtech, I am
guessing. Yes. But I didn't get this for my skill or my talent. Okay. This I got primarily because they were acquiring
my company and this is a way for them to pay out the
money slowly rather than on day one. What is your background? Which college did you study in? IIT Kharagpur.
Did that also help in your, you know, starting your entrepreneurial journey? Absolutely. I am telling you, there are a few things which have helped me a lot in life. To take risks, to experiment. One, my parents were always independent. I have never had to give a single rupee to
my parents. The second thing which has really helped me
is my wife was very well educated and in a very good
job which allowed me to take a lot of risks. The third is that I went to a good college and through that college, you build a network. I have friends in senior positions in multiple
places. This is it. You are the sum of your privilege, your background and the people that you have interacted with over your life.
Okay, so now we will talk about your expenses. Do you live in a rented apartment or is it
an owned? It's an owned flat. I shifted to Jaipur in 2015 to be closer to
my parents and at that point of time, I purchased the
flat that I still live in today. Did you take it on loan or did you pay in
cash? No, it was entirely in cash because at that
point of time, I had been doing business for 2-3 years.
The second thing is your travel. So, do you have a car or do you travel in
cabs? I have a car but I don't really like to drive
that much. So, how much fuel do you spend on a monthly
basis? I have no idea. So, you don't track expenses in general? That way, no. So, The way I track expenses is at the beginning
of the financial year, I check how much money was in the bank account. Throughout the year, I just find out how much
money went out of your bank account. So, that's how I determine how much I spent
this year. So, on an annual basis, how much did you spend
in the last 3 years? Around 2 lakh rupees goes into maintenance. Society, maintenance plus the other property
that I own.
5-7 lakh rupees is the vacation. Another 2-3 lakhs would be eating out, drinking,
parties. Parties, not the pub parties. Parents' 50th anniversary, the first birthday
of the child. So, all these parties add up. 3 lakhs or a little more than that would go
towards the house help staff. These are the big hits. Now, it is time for the main thing, which is talking about your financial independence
and retirement plans. The first and main thing is figuring out your
FIRE number. How much money would I need to not work and can retire comfortably.
So, in which year did you seriously start
thinking about FIRE? Which year? Covid, 2020. 2020 is when I actually sat down and did the
numbers. Where I have this much money, I will put this
money here and there. So, it took me around 3 months, maybe 6 months to figure out how much money I exactly need,
how do I need to invest it. And then it took me a couple of years, 3 years
to execute that. So, if your annual expense is 25 lakhs, if you take a multiple of 30, it is 7.5 cr. Right? So, what are some of the milestones that you
took into account? There are two major chunks that I have kept. One of them is nearly everyone likes and accepts
that you have to save money for your child's higher
education. So, I have earmarked 50 lakh rupees for that. Wow! I will give it to him at 18 or whatever appropriate
age. 7.5 Cr plus 50L. For this? Yes. 8 cr. Another 50L is what I wanted to keep as a
sort of play money for experiments that I would want to do.
Angel investing is one of them. Crypto investments is one of them. I am doing a podcast right now, so it has
its own expenses. Yeah. You should check out his YouTube channel,
okay? Every month, two videos come up specifically
talking about how to achieve FIRE. Okay? There is a link in the description. Definitely subscribe. That is 50 lakhs, your play money. How is that going by the way? Angel investments and other investments? I have lost a lot of money in angel investments. I have lost a little bit of money in crypto
as well. But the biggest problem in angel investments
is that it is extremely illiquid. There is no honesty. So, I had put 3 lakh rupees in a company in
2019. In 2021, it became 45 lakh rupees. Ravi Handa is happy that it is done. Did you get an exit? Exit? The company closed in 2023. It became zero. Oh shit. So, that is the problem with angel investment. That's why you have allocated an amount which you yourself have called play money.
Correct. Any other milestones that you have covered? No, these two. 8.5 cr was your FIRE number. You said that you started investing a huge
amount since 2015. You started investing or saving more. From 2006 to 2015, did you manage to save any portion of your
salary? Yes, we were always saving more than 50-60%. We used to save this much. So, it was business, revenue was high, that's
why you didn't save. It was something which was there. Your expenses were always lower than what
you were earning. So, have you accumulated the 8.5 cr ? A little bit more than that. Very nice. How much percentage of that, if you are comfortable
sharing, how much percentage has come from selling
your company and how much percentage of the proportion
has come from your savings? I would say that selling the company probably
gave me 20-25%. Which basically means that this was not a
result of a certain event. No, no. So, this was because my business was successful. The second factor was that my expenses were
very low. The third factor was that I always had substantial
investment in equity. The fourth factor is where I would say the
selling of the company comes in.
The main money that was made was made by business. And let's say if you were doing your software
job, you would have been in the top positions, In that case, do you think this much wealth
accumulation would have been possible? If I was in India, then no. If I had gone abroad, then I would have been
way ahead of this. Is that one of those things that you would,
you know, you look back and want to change? I regret it every week.
If I had been a good student, if I had studied
in college, then I wouldn't have been in the coaching
line. I would have moved to the US or Canada or
Europe or somewhere after college. I can't believe that you are saying that you are not content with what you have achieved
financially. I am absolutely content with what I have achieved. Because I have bounced back from the mistakes
of not studying in college. Yeah. The 8.5 cr that you have accumulated, that too, what are the percentages where you
have invested? My current net worth would be somewhere between
12-13 cr.
Out of this, 1-1.5 crore rupees, which is
my 4-5 years of expenses, I keep it in absolutely liquid low risk investments. So, this is my cash bucket. In the medium term bucket, I have taken a
balance advantage fund. I have long term bonds, gilt funds, which is another 4-5 years of expenses. So, a mix of equity and debt. Third bucket, which is my long term bucket, another, I believe, 6-7 crores would be in
that and then there is a piece of land that I own
which is around 2 cr. Tell me one thing, how to go about it? Primarily if you are young you need to save,
develop as a habit sort of a thing but your focus should be on making money.
Where will you earn money from? Either you will grow in a job or you will
join risky jobs like startups to get ESOPs or you leave the country, you go abroad you
earn a lot more there, you save a lot more there and you come
back and you know you can be in a very good situation or what you do is you get a higher
degree. Suppose you have done engineering, MBA, Masters
in Engineering, there are plenty of avenues. Your main focus should be on making more and
more and more money. Because after one point your expenses can't
get less. So if you want to increase the alpha, the
difference in income and expenses that will only happen if you are constantly focusing on increasing
the top line. Let's say I have decided that I want to retire
early. What was the framework? What were some of the thought processes? One according to me even hoping for planning
for early retirement is sort of accepting a failure that you couldn't make your career
in your life better that's why you are going towards retirement.
Yes financial independence is important, early
retirement is not. If you are in a job that you like, that you
enjoy or I will say if you are in a job or in a career that you don't hate, do not think
about early retirement. Early retirement became important for me because
I wasn't liking what I was doing. So this is our quick finance round.
You have to answer the questions as soon as
possible. If you had an unlimited budget, what would
you gift your wife? Vacation, luxury vacation. If money was out of consideration which in
your case holds true, what would you do for a living? I don't know I will keep experimenting with
it which is what I am doing right now. And the last question is for people who want
to achieve financial independence and you know are seeking early retirement, what are
2-3 nuggets of advice that you would share with them? For financial independence, increasing your
income as much as possible that should be your priority. The second priority should be that bulk of
your savings should go into equity. If you are chasing early retirement, I think
that is a bad chase to have.
That should be, that is like surgery, that
should be the last option. Try changing your job, try changing the city
you work in, try changing the country you work in, try changing your careers. If there is no avenue, that is when you think
about early retirement. Alright, that brings us to the end of the
episode. Thank you so much for sharing your journey. I am sure that a lot of people have learnt
a lot from today's episode and video.
Make sure to check out his YouTube channel. Every month at least 2-3 videos are made on
this topic. Subscribe to his channel and if you liked
anything in this video, subscribe to my channel as well. Goodbye..
5 Best Fidelity Funds to Buy & Hold Forever
Jason 0 Comments Retire Wealthy Retirement Planning
today we're going to talk about the five best fidelity funds to buy and hold forever hi if you're new to the channel my name is tay from financial tortoise where we learn to grow our wealth slow and steady in order to guide our conversation i'm going to use the three fund portfolio strategy to frame the fidelity funds i'm going to recommend in this video the three fund portfolio is one of the most popular do-it-yourself investment strategies and as the name implies it's made up of three simple funds most often an equities fund an international fund and a bond fund so all the funds i'm going to recommend today will fit into at least one of these slots the first fidelity fund you want to buy and hold forever is fidelity's u.s bond index fund fxnax it tracks the bloomberg barclays u.s aggregate bond index which is composed of investment-grade government bonds corporate bonds and mortgage-backed securities it holds approximately 8 400 bonds the top issuers are the u.s treasury or issuers of mortgage-backed securities like fannie mae and freddie mac it has an expense ratio of 0.025 percent which means if you have 10 000 invested in fidelity us bond index fund you're essentially paying 2 dollars and 50 cents for fidelity to manage this fund for you the fund started in 1990 and since then its average annual total return has been 5.33 percent so what are bonds and why do you need them in the simplest term bonds or loans when you buy bonds you're essentially loaning money to someone in this case to a company or a government agency and they're a very important addition to a well-constructed investment portfolio because of how different they are from stocks a good analogy i like to use to frame stocks versus bonds is this think of stocks as your core wealth building engine without it you aren't really going anywhere and bonds are like your brakes without it you could drive yourself off the road when you have bonds in your portfolio it helps to smooth out your investment ride because though they have lower returns they have less volatility during times of market crash where your stock investments can dip by 20 to 30 percent your bond investments will hold steady and ensure your right is so rocky so in order to help you smooth out your investment right you want to start adding them to your portfolio as you get closer to retirement age and if you're invested in fidelity consider fidelity u.s bond index fund as your core bond holding in your portfolio the second fidelity fund you want to buy and hold forever is fidelity total international index fund ftihx the fund tracks the msci all-country world index excluding the united states it represents approximately 5 000 international companies the top companies in this fund are made up of companies like taiwan semiconductor nestle and asml holdings it has an expense ratio of 0.06 percent which means that if you have 10 000 invested in ftihx you're essentially paying six dollars for fidelity to manage this fund for you the fund started in 2016 and since then its average annual total returns has been 5.99 what the fidelity total international index fund will do for you is provide you exposure to the international market outside the united states exposure to different countries sectors and even currencies and we can look at what happened to the japanese stock market as a lesson on why we might want to hold an international fund at the end of 1989 the japanese stock market's capitalized value was considered the largest in the world the nikkei 225 index the index of 225 largest publicly owned companies in japan reached an all-time high of close to 40 000.
Sadly 22 years later the nikkei was under 8 500 and to this day has yet to reach its all-time high again but satur is a japanese investor who failed to invest in international stocks outside of japan the us-based companies are currently the world leader in market capitalization and revenue but who can confidently say that will stay like that in the future it would be unfortunate but the same thing could happen to the u.s stock investors i personally still have strong confidence the u.s economy and u.s based companies as a whole but i also have to continuously check my assumptions financial writer larry swegel had a saying never treat the highly likely as certain and the highly unlikely as impossible as you get more comfortable with the international market you can start adding them to your portfolio and the fidelity total international index fund is a great option to represent your international holdings the third fidelity fund you want to buy and hold forever is fidelity zero total market index fund fzrox the fund tracks fidelity's in-house fidelity u.s total investable market index it represents approximately 2 700 u.s based companies the top holdings in this fund are apple microsoft and amazon it has an expense ratio of zero percent yes you heard me right zero dollars to invest in fidelity zero total market index fund thus the zero in its name the fund started in 2018 and since then its average annual total returns has been 11.82 the fidelity zero total market index fund is a total market index fund which means it tracks the total u.s stock market so this will be a great option as your core equities holding in your three fund portfolio however there are a couple things i do want to note with this fund especially in comparison to the two other equities options i'll cover here in a bit one is the fact that the index it is tracking is fidelity's in-house index fidelity u.s total investment market index this necessarily isn't a bad thing but there are actually more than 2 700 publicly traded companies in the united states than what this fund represents what this fund has done is exclude really small companies from its index in a big scheme of things this doesn't make that much of a difference in performance since the representation is based on market capitalization so the excluded companies would only represent maybe one percent or even less than that of the total fund but this is still something to note the total market here isn't quite the total market a second item to note with the fidelity zero total market index fund is the fact that you can't transfer your shares to another firm without selling your holdings and when you sell your holdings you have to pay taxes on your capital gains the fidelity zero total market index fund was designed with zero percent expense ratio in order to gain more customers so fidelity doesn't want you to move your money to a different firm and this limitation creates that barrier paying zero percent is nice but you won't understand that free comes with some strings attached but if you're planning to stay with fidelity for life fidelity zero total market index fund is a great equities fund to hold the fourth fidelity fund you want to buy and hold forever is fidelity total market index fund fskax the fund tracks the dow jones u.s total stock market index it represents approximately 4 000 u.s based companies the top holdings in the fund are apple microsoft and amazon essentially the same as fidelity zero total market index fund it has an expense ratio of 0.015 percent which means that if you had 10 000 invested in fidelity total market index fund you're essentially paying 1.50 for fidelity to manage this fund for you the fund started in 1997 and since then its average and annual total return has been 8.29 it's fidelity's original total market index fund prior to the introduction of fidelity zero total market index fund and fidelity total market index fund does exactly what his name implies invest in the total u.s stock market essentially every u.s based companies out there when it comes to investing in the stock market the key principle you want to abide by is diversification many people tend to think the only way to make money in the market is to beat the market by either selecting good stocks or good actively managed mutual funds unless you're a professional investor with hundreds of analysts working for you around the clock analysts who are constantly interviewing and researching companies and industries we can't win in the stock picking or fun picking game the odds are just stacked too high against the individual investor so the best strategy to beat wall street is to just track the market and at the lowest cost and fidelity total market index fund is a great fun to hold as your core equity is holding in your portfolio if you want more flexibility from the fidelity zero total market index fund the fifth fidelity fund you want to buy and hold forever is fidelity 500 index fund the fund tracks the s p 500 index which represents the 500 largest publicly traded companies in the united states at the time of this video there are exactly 508 publicly traded companies in this fund the top holdings in this fund are apple microsoft and amazon essentially the same as fidelity zero total market index fund and fidelity total market index fund not a surprise given the company representation is based on market capitalization and these big companies represent a good percentage of the market as a whole it has an expense ratio of 0.015 percent same as fidelity total market index fund so if you have ten thousand dollars invested in fidelity 500 index fund you're essentially paying dollar fifty for fidelity to manage the fund for you the fund is the oldest of the bunch it started in 1988 and since then its average annual total returns has been 10.66 percent when most people talk about the stock market they're most often referring to the standard and poor 500 not the total market index and the reason is because it's so much older it was created in 1926 when it began tracking 90 stocks and in 1957 the list expanded to 500 and for the past century it has been the go-to index to represent the stock market when you turn on any financial news reporters are always discussing how the s p 500 is up 50 points or down 100 points it essentially represents the 500 largest u.s corporations weighed by the value of the market capitalization and because it's weighted by market cap though there are approximately 4 000 publicly traded companies in the united states total these 500 stocks represent about 80 to 85 percent of market value of all u.s stocks and the weight within the index automatically adjusts based upon the changing stock prices to this day the s p 500 remains a standard to which professional mutual fund managers and investment firms compare their returns against so if you want your equities holding to match the performance the largest u.s stocks since they're essentially what moves the market hold fidelity 500 index fund as your core equities holding but i do want to say this whether you choose the fidelity 500 index fund the fidelity total market index fund or the fidelity zero total market index fund as your core equities holding you really can't go wrong with any one of them they're all great funds you just want to understand exactly what you're buying that's it guys i know i normally advocate for vanguard funds but sometimes you may not have the ability to choose the investment firm that you want because maybe your employer doesn't offer it that was the case for me and therefore most of my 401k is actually invested in fidelity fidelity is a great investment firm if you're looking to invest with them pick any of the five that i mentioned here and you can't go wrong if you'd like to learn more about the three fund portfolio and why you might want to consider it as your strategy check out my video here thank you guys for watching until next time all the best
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Income and Wealth Inequality: Crash Course Economics #17
Jason 0 Comments Retire Wealthy
Jacob: Welcome to Crash Course Economics,
I'm Jacob Clifford… Adriene: …and I'm Adriene Hill. The world
is full of inequality. There's racial inequality, gender inequality, health, education, political
inequality, and of course, economic inequality. Some people are rich, and some people are
poor, and it can seem pretty impossible to fix. Jacob: Well, maybe not. [Theme Music] Jacob: So there are two main types of economic
inequality: wealth inequality and income inequality. Wealth is accumulated assets, minus liabilities
so it's the value of stuff like savings, pensions, real estate, and stocks. When we talk about
wealth inequality, we're basically talking about how assets are distributed. Income is
the new earnings that are constantly being added to that pile of wealth.
So when we talk
about income inequality, we're talking about how that new stuff is getting distributed. Point is,
they're not the same. Let's go to the Thought Bubble. Adriene: Let's look at both types of inequality
at the global level. Global wealth today is estimated at about 260 trillion dollars, and
is not distributed equally. One study shows that North America and Europe, while they
have less than 20% of the world's population, have 67% of the world's wealth. China, which
has more people than North America and Europe combined, has only about 8% of the wealth.
India and Africa together make up almost 30% of the population, but only share about 2%
of the world's wealth.
We're teaching economics, so we can focus on income inequality. These
ten people represent everyone on the planet, and they're lined up according to income.
Poorest over here and richest over here. This group represents the poorest 20%, this is
the second poorest 20%, the middle 20%, and so on. If we distributed a hundred dollars
based on current income trends, this group would get about 83 of those dollars, the next
richest would get 10 dollars, the middle gets four, the second poorest group would get two dollars
and the poorest 20% of humans would get one dollar. Branko Milanovic, an economist that specializes
in inequality, explained all this by describing an "economic big bang" – "At first, countries'
incomes were all bunched together, but with the Industrial Revolution the differences
exploded. It pushed some countries forward onto the path to higher incomes while others
stayed where they had been for millennia." According to Milanovic, in 1820, the richest
countries in the world – Great Britain and the Netherlands – were only three times richer
than the poorest, like India and China. Today, the gap between the richest and poorest nations is like
100:1. The gaps are getting bigger and bigger.
Thanks, Thought Bubble. The Industrial Revolution
created a lot of inequality between countries but today globalization and international trade are accelerating it.
Most economists agree that globalization has helped the world's poorest people, but it's
also helped the rich a lot more. Harvard economist Richard Freeman noted, "The triumph of globalization
and market capitalism has improved living standards for billions while concentrating
billions among the few." So, it's kind of a mixed bag. The very poor are doing a little better, but
the very rich are now a lot richer than everybody else. There are other reasons inequality is growing.
Economists point to something called "skill-biased technological change." The jobs created in
modernized economies are more technology-based, generally requiring new skills. Workers that
have the education and skills to do those jobs thrive, while others are left behind.
So, in a way, technology's become a complement for skilled workers but a replacement for
many unskilled workers.
The end result is an ever widening gap between not just the
poor and the rich, but also the poor and the working class. As economies develop and as
manufacturing jobs move overseas, low skill low pay and high skill high pay work are the
only jobs left. People with few skills fall behind in terms of income. In the last thirty
years in the US, the number of college-educated people living in poverty has doubled from
3% to 6%, which is bad! And then consider that during the same period of time, the number
of people living in poverty with a high school degree has risen from 6% to a whopping 22%.
Over the last fifty years, the salary of college graduates has continued to grow while, after
adjusting for inflation, high school graduates' incomes have actually dropped. It's a good
reason to stay in school! There are other reasons the income gap is
widening.
The reduced influence of unions, tax policies that favor the wealthy, and the
fact that somehow it's okay for CEOs to make salaries many, many times greater than those
of their employees. Also, race and gender and other forms of inequality can exacerbate
income equality. Jacob: Let's dive into the data for the United
States. We'll start by mentioning Max Lorenz, who created a graph to show income inequality.
Along the bottom we have the percent of households from 0-100% and along the side we have the
percent share of income.
By the way, we're using households rather than just looking
at individuals because many households have two income earners. So this straight line
right here represents perfect income equality. So every household earns the same income.
And while perfect income equality might look nice on the surface, it's not really the goal.
When different jobs have different incomes, people have incentive to become a doctor or
an entrepreneur or a YouTube star – you know, the jobs society really values. So this graph, called
the Lorenz curve, helps visualize the depth of inequality. Now, for 2010, the US Census Bureau found
that the poorest 20% of Americans made 3.3% of the income. And the richest 20% made over
50% of the income. So that's pretty unequal but has it always been like this? Well, in
1970, the bottom group earned 4.1% of the income and the top earned 43.3%.
By 1990,
things were even less equal so the 2010 numbers are just a continuation of the trend. And
it isn't just the poorest group that's losing ground. Over those 40 years, each of the bottom
groups or 80% households earned smaller and smaller shares of the total income. Now, from the Lorenz curve we can calculate
the most commonly used measure of income equality – the GINI Index. Now without jumping into
too much of the math, it's basically the size of the gap between the equal distribution
of income and the actual distribution. Now, 0 represents complete equality and 100 represents
complete inequality. Now, you might be surprised to learn the US doesn't have the highest income
inequality, but it does have the highest among Western industrialized nations.
The UK has
the highest in the EU. Adriene: The debate over income equality isn't
about whether it exists. It obviously does. The fight is over whether it's a problem and
what should be done about it. Let's start with those who don't think it's a big deal.
They tell you that the data suggests that the rich are getting richer and the poor are
getting poorer, but that might not be the case. Instead, it could be that all the groups
are making more money but the rich's share is just growing faster. Like, let's say you
own an apple tree and we pick 10 apples. You keep 6 and give me 4. A week later we pick
20 apples, you take 15 and give me 5. So my share of the total went down from 40% to 25%
but each of us still got more apples.
So it's true that people in the lowest income bracket have
earned a little more money in the last 40 years, but in the last 20 years, that average income has been falling.
Meanwhile, the rich have continually gotten richer. So, what's the richest guy on earth have to
say about it? Bill Gates said, "Yes, some level of inequality is built in to capitalism.
It's inherent to the system. The question is, what level of inequality is acceptable?
And when does inequality start doing more harm than good?" There's a growing group of
economists who believe income inequality in the US today is doing more harm.
They argue
that greater income inequality is associated with a lot of problems. They point to studies
that show countries with more inequality have more violence, drug abuse and incarcerations.
Income inequality also dilutes political equality, since the rich have a disproportionate say
in what policies move forward, and the rich have an incentive to promote policies that
benefit the rich. So, how do we address this inequality? There's
not a lot of agreement on this. Some argue that education is the key to reducing the
gap. Basically, workers with more and better education tend to have the skills that earn
higher income. Some economists push for an increased minimum wage, which we're going
to talk about in another episode. There's even an argument that access to affordable,
high quality childcare would go a long way. And some think governments should do more
to provide a social safety net, focus on getting more people to work and adjust the tax code
to redistribute income.
Jacob: Some economists call for the government
to increase income taxes and capital gains taxes on the rich. Income taxes in the US
are already somewhat progressive, which means that there are tax brackets that require the
rich to pay a higher percent of income. Right now, it peaks at around 40% but some economists
call for increases up to 50 or 60%. One idea is to fix loopholes that the rich use to avoid
paying taxes. Other economists argue that taxing the rich won't be as effective as reducing regulation
and bureaucratic red tape. It's unclear which path we're going to take but extreme income inequality
at the national and global level needs to be addressed. Motivation to improve income inequality may come
from a genuine desire to help people and level the playing field, or the fear of Hunger Games-style social
upheaval. But either way, the issue can't be ignored. Adriene: Even Adam Smith, the most classical
of classical economists, said, "No society can surely be flourishing and happy of which
the far greater part of the members are poor and miserable." Thanks for watching, we'll
see you next week.
Jacob: Thanks for watching Crash Course Economics.
It was made with the help of all of these nice people. You can help keep Crash Course
free for everyone forever by supporting the show at Patreon. Patreon is a voluntary subscription
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DFTBA..
Live your Best Life with the Best Retirement Advice You’ll Ever Get!!
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
we've been researching and living retirement for about 5 years now and we learned a lot about what works and quite frankly what doesn't work and we you know coached a lot of people and we get a lot of comments on our YouTube channel so there's a lot of people who enter this phase really unprepared and then they just wander around and end up bored and even depressed you know without the right strategies you're missing out on the joys and opportunities that retirement can offer to you so today we're going to give you the top 20 pieces of advice from ourselves but also from so many of our clients who are having a really great time in retirement that they describe as super successful and make sure you stay till the end because we're also going to throw in our top five retirement tips can't wait to get to that yeah exactly listen if you're new here I'm jod and this is my husband Mark now we don't focus on the financial aspects of retirement but really what we do focus on is lifestyle Health relation relationships and so much more we hope you like our videos and if you do please share them with someone you care about and definitely like them as you're on your way down your retirement Journey so let's talk a little bit about our journey for the last 5 years because we don't want you all to think just because we have a YouTube channel that we have it all figured out we do in many regards but I I would say the the one thing that we're doing really well is working at it we do yeah I would say that we work at it every day almost to the point where sometimes you know how you work at something so long that sometimes you're like okay I'm going to take a pause on this every once in a while I'll have to call the pause yeah and and I don't want to give away our five tips but the one thing that you and I have going for us well there's really 10 things but I only want to focus on one now is our communication yeah you know we don't always agree nor do we always get along well we always communicate yeah you know we really do give each other respect the space to have an opinion um and you know we're human beings and living together can have its challenges absolutely but we I think the big thing for us is experimenting we don't always agree we don't always get along but we always reset and regroup and what's what else am I looking to say well sometimes I think we also just do what I said just take a pause right I mean sometimes you have to just kind of step away to go back at it with fresh eyes yeah so you know we keep we do keep track of what's working and what isn't working for us and you know what worked for us for all the years that we were married that we were working may not work for us now so we've had to adapt a few things for sure you know when we were working it was I'm not going to say it was easier but there was so much going on there really was no downtime right now we have downtime and we need to make sure we're we're doing it the right way y so you might be wondering why do you even need to think this Harden retirement well we have people say that to us all the time you know you guys make it sound like it's so much work in retirement that's when you're supposed to have no work right well what we found out is our retirement other people's retirements are successful and they're happy because they spend a little bit of time working on things right now by the way we've got a whole bunch of free downloads but we're going to put a link below to one it's a health and wellness checklist we want you to get that download and use that to kind of reset your health in retirement that's really really important so let's jump into some of the best retirement advice we've heard from RE reies thus far and again stay till the end where we'll do our top five retirement tips okay first thing stay active first thing always what staying active it is it's one of our first things we always say I can't emphasize this enough now we have a new puppy who is in the background is he eating something well just a dresser no he's eating a knob on a dresser maybe you should grab him but staying active it's her uh yeah it's a her so we'll bring her up um you get to see Ruby this but uh staying Physically Active it boosts your mood it boosts your health you know walking walking walking our dog is always helpful but we're both pretty big fans of some regular type of exercise Absolut and you need to do that yep yep and you know we read a great book called outlived by Dr Peter ATA and he talks a lot about exercising being the best medicine for longevity okay you can't lick the microphone all right second thing nutrition you've really got to understand what it is that you put into your mouth you know my mom said that when I was a kid but as we get older you know there are changing nutritional needs that we need to be aware of and you got to have a good balance of fruits vegetables lean proteins and whole grains absolutely and you know you have to also stay hydrated you know you have to limit your intake of sugary or processed foods and definitely make sure that you're Consulting a nutritionist I think or a dietitian even of sorts and make it fun in the kitchen you know explore some new recipes or Cuisines to keep your meals exciting and nutritious yeah you do good with that because you're really our cook I'm really appetizers Ambiance and clean up well we've moved from Strictly meat and potatoes and gravies I I call it comfort food to more of a Mediterranean diet so we don't do much beef we do a lot of chicken we do a lot of fish having fish tonight right um a lot of vegetables and we feel better because of that the exercise and nutrition really makes us feel great absolutely so the next thing is really to just you know our retirees tell us all the time you know continuous and constant learning keeps our brains active and really keeps us sharp and keeps us young yeah and you know retirement offers you the freedom to explore new hobbies or skills or go to the library when was the last time you're in a library you know it's amazing to walk I love walking through bookstores but walk through a library is even more fun because it just massive and there's so many different sections you can get lost in there forever right and you know I think that uh local community centers like uh got down here in Florida they've got all of these nature preserves they just kind of fun to go walks Serenity walks and different things another thing that's really important and the fourth tip today is socializing you really got to make sure you're getting out and making new connections there are a lot of people in the same boat that you're in right that want to meet new people down here in Florida we're just really getting so much better at putting ourselves out there Y where you can volunteer join a club um I and it's not that hard you know I think we make socialization as we age a lot harder than it really needs to be it's like almost like we build up these walls around how am I going to get invited or who am I going to know or what am I going to say and you know really it's just a matter of putting yourself out there and being you I mean you you are very interesting and what we always tell our kids is it's important to be both interesting when you're socializing and interested so you know have your battery of questions kind of lined up that you're going to you know say to people when you're in Social settings a lot a lot of it is easier than you think so that's all about meeting new people and networking so to speak uh the other thing the fifth tip is nurturing your current relationships we get that a lot from our retirees what's that that need to do this once they are retire I mean whether it's your children or your old colleagues at work or your relatives or high school friends or college friends these are people that at one point in your life were probably pretty close to you will reach out and find out what they're doing look for them on Facebook or whatever but don't be afraid they're probably wondering if they're retired as well gosh I I wonder where my high school friends are and when you call them I guarantee you they're going to be like oh my gosh I can't believe it just called and you have the most wonderful conversation so I also think that in the nurturing relationship bucket Mark I I also think it's a time where you can really sit back and address any unresolved conflicts that you might have whether that's with family or old friends or you know old neighbors or colleagues you know it's a good time to be able to address all of that for sure okay um staying financially Savvy lot of the lot of our clients and ourselves and people leave comments that you know how much money can I spend spend should I downsize or rent when should I take Social Security or my pension you know we have a great tool that we um came in contact with through new retirement and it's actually a um a portal where you can connect all your bank accounts and it actually pulls everything and it shows how much you're spending it shows you what might happen if you downst it's a really cool too it's it's like a scenario plan yeah so we'll put that down below but these are all questions that people have you need to get the answers so either a financial planner or um your accountant or using this tool but you know having a regular budget can be helpful because you kind of know how much you can spend right um I think the other thing that we see a lot of because we get it all the time too is being really careful about scams oh I know you know this thing where people call up and say that uh it's it's an email and or they'll say is this Mark Rollins and you say yes and then they have your yes there so there's a lot of those things that are happening good financial adviser and really understanding your finances is really important okay the next thing I would say and and I didn't do this as much during my career but I've really taken this on um and with some advice from our retirees is prioritizing your mental health your mental health and wellness is so important it's critical and almost as crucial as your physical health right uhoh Ruby's getting adventurous Ruby's getting out of hand um you know meditation I talk about meditation a lot lot I talk about journeying a lot and you know five five or six years ago I started meditating and if you asked me the day before I was meditating would I ever do it I would I would have said no yeah but it really is a lifesaver now it really helps me every morning to kind of get myself set for the day journaling gets my ideas and my feelings out on a piece of paper it really has helped me tremendously be more calm and in the moment for whatever comes our way absolutely and you know what I I remember you and I remember you the day before you started and and you really that's a true statement you never would have done it if if you didn't you know kind of feel like you had to do it at that point okay the next thing I would say is um you know our retirees these days are really embracing technology you know it offers a great tool to stay connected and informed and even entertained and then there's you know the platforms like Zoom or Skype that allow you to do virtual meetups with family family members we just yesterday gave our grandson Luca his fifth birthday present oh yeah via Zoom they're in California they're in California and we're here in Florida and we had the present all set it was all ready you know we had it all kind of concealed his eyes were covered and um that was really the only way we were able to celebrate so I think it was good that we were able to do that and they're able to do it you know back with us I mean I think Luka could zoom or Skype us probably without his parents well on the way to school a lot in the morning uh Jonathan will give Luca his phone and luuka and I will have a conversation on the way to school which is fun so there's um there's a lot you can do with technology and I I find that when people are struggling with technology they're struggling with life so really investing some time and learning how to use your phone right learning how to use your computer it really is important I think the next you know the next thing our retirees tell us is you know you know travel and explore you know traveling provides such EXP exposure to new cultures you know I know we've got a safari coming up at the end of next year we're both a little nervous about um but new cultures new foods new experiences and even some local trips some stations but going to the next town over I know I had a hard time saying that the other day but the next town over can be really fun and it keeps you busy so you can plan a trip you can research trips we we've we've now seen recently there's a lot of travel agents that specialize in trips for solo not solos solo retirees or solo people individual people so you go on a vacation with 10 people who are all there on their own right and you know the travel agent does a pretty good job we hear of making sure that you're all the same um you know you're you're going to the same place for the same reason and that you'll pretty much get along so that's great so more advice from our um retirees that we've been kind of investigating and calculating this is always a favorite re-evaluate your living situation and you know what I mean by that is you know consider your proximity to you know family to friends to Health Care Facilities to your doctors to your favorite recreational areas you know re-evaluate if where you are here today is where you really want to be or need to be as you move through your retirement yeah I think that's really important because there are so many options for you today to live and again it's not just about downsizing which I think we're going to talk about in a minute but it's really where do you live and how are you living we we always talk about wanting to end up as we get older being there one of our kids and we have six it's just hard but they haven't really we're not necessarily on the same page on this one what do you mean well I mean I think it would be great but I like who do you pick how do you pick what do you do I I'm not going to say it on here but I know who I'm going to pick okay I want to be taken care of okay I know who she is oops did I say that okay so the the next thing is downsizing or rightsizing your home so this has Financial connotations but it also has a tremendous amount of um psychological stumbling blocks that you need to get over in order to even think about downsizing and the first place to start instead of just saying I don't want to talk about it with your partner you have to talk about it I think that's really the first thing we have a lot of people who are frustrated with this topic because they're spouse or partner don't want to talk about it well well the retirees that we spoke to for this video said you know this is a scary and dangerous topic right downsizing you know decluttering is a little bit easier than downsizing downsizing means you're thinking of making a big move right and if you're both not on the same page it becomes divisive so you know the retirees uh that we talked to said this is good advice to start to bring up early in your retirement really planning the seeds you know where do you stand on on this you know is simplifying something that's going to lead to less stress or are you the house that everyone comes to and and we've done and that's fine too we've done uh several videos on this topic of downsizing there's another one that says if downsizing isn't right for you some things that you can do really the process here is to simplify your life you're now in a phase of your life where you've got more free time you can travel so will Trading houses up or down make your life simple right so right and it's you know it's a therapeutic process and speaking of a therapeutic process the next thing that everyone says helps them so much is beginning the process of decluttering right and that oh my gosh we we try to declutter all the time it gives you mental Clarity it makes your home safer and there's so many emotional but what's so funny I'm laughing because if we try to declutter all the time where's the Clutter coming from I don't well yeah the first thing is to stop buying stuff right yeah exactly because you know take the Amazon app off of your phone because you know when you declutter you know and then you declutter again and again you got to start saying to yourself where is it all coming from well I I mean you can start with a closet you can start with a dresser and you know there's a lot of gems inside your closet and your dresser that other people can use if you're not using I mean if you're not if you haven't worn a c outfit for 2 years get rid of it yeah you're never going to wear it again the other thing is when you when you take a look at an item in your closet if you wouldn't buy that new today get rid of it right you know so you know you don't need your suits anymore your work clothes if you've retired so decluttering can really be fun we did we've done a lot of videos on that too you know this next um item a lot of our retirees really felt uh strongly about and and that is to document your legacy you know sharing your life stories is such a gift to all the future Generations in your world you know writing or recording or even creating digital albums you know can be great methods of documenting your legacy and this is the one thread I think that I heard that just everyone spoke about with passion there's a good friend of mine um who is a a grandmother she's got three children and five grand grandchilden and she writes a letter I think she writes two letters a year to each grandchild every year she's been doing that since the kids were born and she's telling them stories she's sharing with them a little bit about her um her preferences or political background uh you know how she feels about certain current events that are going on right now it's really going to be an amazing gift to give to these kids to be able to have a letter from their grandma mother from 20 years ago about some current event that was happening and how it's making her feel so it really is a neat project that she's done yep well you just saw Ruby or maybe you did but adopting a pet you know it gives this is controversial with retirees actually okay you know because and I didn't mean to interrupt you I know I'm going to get hit with comments on stop interrupting it's typically me that interrupts you that's what the comments say but um you know adopting a pet or rescuing a pet or somehow putting that type of love and companionship into your life gives you so much the flip side and I guess where I'd say it becomes controversial is you have to be you know ready for it you have to have you know the financial wherewithal to handle it you have to have the bandwidth to handle the training the potty training the dog walking you have to have good physical activity and if you don't it's going to help you get there but you have to be ready for it and this one just kind of was like uh probably 7 25 a was interesting for us though we've had two dogs together before we had sugar um and we had little Max and we just got the dogs and we just brought them up the way we wanted to well because we were working we were still so now we have Ruby for three days and I said to jod why don't we do this differently why don't we find some YouTube channels and learn how to really train a dog well it's actually been really exciting for us because we're learning some things we never knew right and I think it's been really helpful for us and for little Ruby and for rucious yeah so having a Pet's great it well it's works for us and again it was kind of a controversial well there is a lot of love that comes back yep and there's just a lot of anxiety that comes with the love so all right the 15th tip you could join a club or start a club right so coffee uh with uh so for a man get one buddy have coffee once once a week bringing have him bring a guest and you bring a guest get up to like 10 people and have weekly coffee tell stories I I do that all the time and I love it so it's it's a really fun way to well let me say this it's important Jody and I have a business we're married we have kids we do a lot together but we do a fair amount apart too so I think that for everyone in retirement if you're solo you're solo but if you're a couple you got to have your own stuff yeah you got to have your own club you got to have your own group yep um you know the next thing is to seek out mentorship opportunities you know um again our retirees had a wealth of professional and life experiences and there's so much that they could share with younger Generations that they would engage in really meaningful guided conversations that helped build multigenerational connections for them and again they got pretty charged up about seek seeking out these opportunities you know Mark and I did that at the University of Hartford in one of the business classes where we kind of did a guest professorship for a day and then we actually took applications for um for students to mentor and it was a really fun year for us well the thing there's a couple things that happen first of all you're helping someone else but you feel fulfilled you know you feel like you have a sense of purpose uh by guiding others and the other thing is I'm going to go guide is get getting mentored by someone who's younger than you I mean I have two mentors we kind of Mentor each other one is my son and one is another young professional that I know but but I actually can learn a lot from them they have a different outlook on business they have a different outlook on life and it really has been helpful to me for sure so that that's been fun yeah it has sorry I had to step away um this was I thought an interesting one and this came from a a a pocket of our um friends and retirees that wanted to engage in artistic Pursuits um I would put myself in this area I haven't done it yet but exploring different art forums and painting and pottery you know our neighbor across the street Jen she does that every year whenever she gets down to Florida she joins last last year was Pottery this year it's painting drawing it's drawing drawing she joins um art classes and workshops and goes to the local community center and she loves it and that's something I think I would like to do cuz I don't do much for my artistic side but it gives you also um uh Arts a form of expression and emotional release and if you're into that at all it really is kind of fun to do that I mean this in a way what we're doing is Artistic Pursuits I mean we're shooting video and we're you know um you know building a little business but it it's uh it's fun I would I wouldn't say it's a hobby but we've had to learn so much so it's been kind of cool y on the other thing and we just did a Facebook live on this yesterday is um staying updated with current events you know we we did a a Facebook live yesterday in our in our community uh do you consume the news or is the news consuming you right so really finding a way to get good solid news we think is important I mean trying to find reputable news sources or magazines is really helpful versus getting caught up in what everyone calls the fake news if you will but you know uh get involved with Community discussions or forums talk to friends don't be so judgmental when someone has a certain opinion on a news article but really finding a balance there because it is important to stay up to date it is I believe it really is important to stay up to date but like you said it's also can be all consuming we do have some retirees that watch the news Chann channels and you can watch the news channels now 24 hours a day so uh we do have some folks that are doing that which isn't probably the healthiest the next one is well before you do that one of the what's that I interrupted you I get a good comment um we stepped away we have stepped away from watching the news in a in a big way so we'll watch the evening news for I don't know 35 minutes we watch some things on um well Evan your daughter told us to watch NPR well listen that's a podcast it's a podcast so we we we get some news that way but um staying informed about local events or Community changes we kind of stepped away from that we jumped back in you found out about this great concert taking place and then you signed up for it and it was full yeah I mean literally the day I saw it which means it probably was out there before yeah so I think the whole idea of current events is really important things happening in your community so I didn't mean to interrupt you but I didn't want to forget that okay I think the next thing that we heard a lot about from everybody was planning regular family events or Gatherings you know now you have the time to organize events and birthdays and anniversaries and really start to create traditional Traditions like annual family picnics or you know um different things you could do with grandchildren either in groups or select one at a time I mean that's really something fun that you can um really jump into I think yeah we have Thanksgiving um in Florida this Thanksgiving couple weeks couple weeks and we've got five of our six kids coming with their partners and um the grandkids are not going to make it but we can't wait for that and we make it special and we make it a lot of fun and they all have their favorite food here and little gifts and we take a lot of pictures so that we can have really good memories for um for the future um you know investing in self-care is really really important a lot of people don't take time to do that you what it shouldn't have been number 20 it shouldn't have been last no it shouldn't it really shouldn't because now is the time you can dedicate for relaxation and meditation and deep breathing and different things like that if you can afford to get a massage once in a while um you know do yoga on the beach you got to get your health checkups I I know I um I think we'll leave a link below we have a a free yeah Health checkup worksheet is really great so you can download that we'll put that in the comments below but you know you want to engage in activities that stimulate your mind puzzles games right you have to get adequate sleep and rest we have the aura ring so we track our sleep the first thing we talk about in the morning is well just how you do what are your numbers you guys have been patient our top five retirement tips number one you have to have a plan y you need a short long-term plan you need 5 10 15 20 years or more out you know my my plan is to be physically independent at the age of 90 you You' heard me say that before so that is what drives me to get up and exercise every single day and we start each day with a plan that's a good segue to the second big tip exercise exercise exercise exercise exercise it's the number one thing that we can do for ourselves to be healthy and if you're not exercising now keep it simple walk out the front door walk 10 minutes one way and come back and do that for 5 days and then go 15 minutes and then do 20 minutes for a week so you got to do that the third top tip is you've got to build a community of people you've whether it's your family you reach out to whether it's Friends new friends neighbors re-engaging with old work friends number three is you've got to build community and the fourth tip would be healthy habits really review your habits you know think about can you limit your alcohol can you stop any bad habits I mean you stopped cigar smoking you pretty much eliminated chocolate chip cookies pretty much eliminated what do you mean pretty much you bought them yesterday and I haven't had one yet and you're going to throw them out I'm having them and you know keeping ahead of better nutrition you know eliminating your bad foods and making sure you're eating what makes you feel good I was thinking about this this morning healthy habits or food alcohol whatever it is I drink very little now so if you can try going for two weeks let's just say two weeks no alcohol uh change your nutritions try to eat healthy try to get good sleep it's amazing how much sleep you can get when you don't have any alcohol yes try it for two weeks see how you feel just see if you feel any different because that's what's happened to me if I have a glass of wine I feel like crap the next day I've gotten so used to not having one glass yeah yeah but but anyway all right the the fifth thing is to give back you know volunteer start or get a dog Ruby really like that one volunteer or start a company you know during our career we got fulfillment out of our job but volunteering is a great way to replace that right um and if you're married in a relationship have fun have fun with each other look how much fun we're having and doing this right sorry about flexible with each other you know she's brand new we run into trouble here at times together as a couple but try to find ways to have fun yes some of this was ser ious and it can affect your quality of life and other things are just downright important but all of it is to make this next phase of Life exciting and fun so we hope you enjoyed this and if you did this next video top tips for living longer in retirement on that video we talk not only about living longer but almost as important as living healthier so watch this one next
Suze Orman’s Ultimate Retirement Guide
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
Can you all live The Ultimate Retirement? You can. (man) From the New World Center in Miami Beach, acclaimed personal finance expert Suze Orman provides essential advice to make your retirement more successful and secure. Every little actionthat you take can makea tremendous difference. It's never too soon to begin. Fear no more. (man) Join us for Suze Orman's
"Ultimate Retirement Guide." Please welcome Suze Orman! [loud cheers & applause] Thank you. This show is called "The Ultimate Retirement Guide." A very interesting name for a show, isn't it? 'Cause can you imagine, can you just envision, what is your dream of an ultimate retirement? What do those words mean to you? What is so interesting is that yesterday I was talking to somebody, and I asked him, "What does an ultimateretirement mean to you?" And he answered in a veryincredible way; he said, time to be with my family,time to see friends, time to do thingsthat I've never done before.
He did not say one thingabout money at all. Then I thought,now that's interesting, and I started to goto every single person, "What does ultimate retirementmean to you?" "What does ultimateretirement mean to you?" I even today, asked my
makeupartist and my hair person, "What does it mean to you?" And the majority of the people either answeredlike the first person did, I'm going to have timeto go see my family and my friendsand do things I want, or they answered,"I have enough money, I don't have to worryabout money." So that'swhen I put it together, believe it or not that, if you have your money
together,all you care about is what you're going to dowith your time and how to connectwith those that you love.
If you do not haveyour money together, then the answerto that question is about money. I want to have money, I want
to be able to pay my bills, but they didn't at all mention about what they want to dowith their life. The ultimate retirement is about your life being onethat you enjoy, that you love waking upevery single morning to, that you love to seethe sun rise and you love to seethe sun set, versus oh another day, oh I have
todo this, I have to do that. So I ask you, what isyour ultimate retirement? Ask yourselvesthat question right now. And I'd like to know how manyof
you out there are on track to reach what you consideryour
ultimate retirement to be? How many? Please raise
yourhands if you think you are. In fact, don't raise your hands,stand up.
If you're on track to
reachyour ultimate retirement. Alright, stay standingfor a second. Now I want you to lookaround this room 'cause this isa very sad picture. This is not 50 percentof
this room even standing up. This is not even 40
percent,this is like 20 percent of the people in this roomare on track. That means 80 percentof you are not. You can sit down, thank
you,I'm happy for all of you. But by the end of this show,I
hope I'm going to be happy for 100 percent of you because here's what you have gotto understand. If you are not on track, thenthe
question has to be answered, why not, and what can you doto get on track? Because every single one of youhas what it takes to achieveyour ultimate retirement. I look around and I see
thatthere are people in this room that are older and there
arepeople who are younger. I just want to say, for those of you who are youngerin this room, you have to know that now isthe time to learn from those who are older.
Because it is never too soonto begin to achieve your ultimate goal. And isn't it truethat the reason that you work every single day is so that one day you couldretire from working? That is supposedlywhy you all work. However, my goal for all of youis to love working or lovewhatever you're doing, even in your retirement years that you continue to do it. You know,today it's very different than it was 40 years ago when I first started asa
financial advisor in 1980.
Can you believe that? 40 years ago. How old was Suze Orman40 years ago? [laughter] Who cares about 40 years ago, let's talk about how old I amright now. As I stand in front of you,I'm 68 years of age. [applause] No… Wait a minute,there's something wrong when somebody applauds youfor how old you are! [laughter] But here's what's fascinating about that. I never thought I was going to be 68. Did you ever think that you
weregoing to be almost 70, or you were going to be 50? Or do you remember being like
in your 20s or in your 30s and somebody in their 60swould be talking to you and you'd go, god, they're
old,[laughter] they're really old. And you go,oh, I have a long time, and then all of a suddenyou wake up one morning and here you are, and you
arealmost 70 years of age! That is a big deal! And I don't know about you,but
it freaks me out. [laughter] It freaks me out, and
becauseI love my life so much, that means I don't havea lot of years left really to live everythingthat I love doing.
But you know what I mean,but that's a reality that starts to comein your head, oh my god,I need help getting up. You know, I walked up those stairs yesterday, it's not easy for me to walk up those stairs. Years ago I would have popped upthose stairs. But as the body may be aging, the one thing great about moneyis
that it doesn't have to age. You worked your entire lifefor money. When you get older,you now have to make sure that your money worksits entire life for you. 40 years ago, 'cause I always specializedin retirement planning, I don't know if you know thatmy
degree is in social work, with a specialty in geriatrics. [applause] So I had this lovefor the aging. I wanted to make surethat
their lives were fabulous. And very early on I realizedwhat
makes their lives fantastic is when they have money,when
they can pay the bills, when they can hire an aide, when they don't have to worryabout it, and they don't have to bea
burden on their children.
That's what makes it fantastic,but
40 years ago, you guys, it was so easy,I have to tell you. There's a very different
storythan we have right now. 40 years ago you hada situation where almost every single one of the peoplethat
I saw had a pension plan. And their pension also gave
themfull health insurance for them and their familiesfor their entire lives! Real estate was relativelycheap,
believe it or not. Interest rates, yes,they were through the roof, they were 16 to 18 percent,but
you still could have a money market accountor anything, and you could be earning 18,19, or 20 percent.
You could get 14.5 percent backthen
on a 30-year treasury bond. Are you kidding me? So if you wanted your money
inretirement to be safe and sound, you had a place to put it. So I could easily say to people, do this, do that, do that, do this and it
wasdone– just that simple. It's not that simple today. As I'm recording this show,we have interest rates that are the lowestthey've ever been. Good luck finding2 percent anywhere.
Real estate prices have absolutely gonethrough the roof, you have a stock market that
hasalso performed incredibly well. Who knows,will it go on, or will it not? So now you're afraid;what do I do? I don't get a pension, I
can'tput my money anywhere safe and generate income,I still owe money on my home, I'm possibly even still payingfor
my kid's college education and I don't know what to
do,I'm afraid of everything. Fear no more, because there are thingsthat you can absolutely do to change your life around. And what's so fascinating aboutmy
job as a finance expert is to be able to come up withadvice
to fit today's economy, today's economyand tomorrow's economy. And not continueto give you advice that I would have given you40
years ago, 10 years ago, or possibly even 5 years ago. You have to be getting
advice that is good for today that will carry you through your tomorrows, so the question is,are you getting that advice? Do you know what to door are you listening to your next-door neighbor who listensto your next-door neighbor who listens to the other next-door neighbor? Before you know it, you're
all making the same mistakes.
No, no. "The Ultimate Retirement Guide" is the name of this show, and this show is for every single one of you, to guide you from wherever
you happen to be right now, right here, to where you want to be, to where I want you to be. 'Cause I want youto love your life, your personal side of your life, your financial side of your life, 'cause I no longer want any of you to have one foot in one boat called your life and another foot in another boatcalled your money, 'cause when those two boatsstart to separate, you have problems. I want you to have both
feetin one boat called life where you love everythingaround
you, you feel secure, you know whatyour money is doing, you know what you can doand you take all of that with the peoplethat you love around you and you wake up every singlemorning with a smile. That is the goal of this show. Now, you all came here. Maybe you just came hereto see me. Maybe,but hopefully you came here because there is somethingthat you need to know, 'cause I'm going to talk aboutwhat
you need me to talk about.
So who has a question for me?Yes ma'am. Oh my god! Hi Suze. So exciting to be hereto finally talk to you, I'm so grateful for
anyinformation. (Suze) How are you? Your life good? (woman)
Yes.(Suze) I'm glad, what else? My financial track is because of you, but I have a question regarding long-term care. Should I start that because I'm
in my 50s, I'm going to be 55, and should I start that now, or
should I focus a little bit more 'cause I don't have my 8-month emergency fund, which I know you were alwaystelling us to do that. The perfect age to buy long-term care insurance believe it or not, is about
59, right before you turn 60 'cause there is a big premium
increase at that point.
Up to you to decide if you want to do it or not. Do you have credit card debt? (woman) Yes. So you have credit card debt, you don't havean 8-month emergency fund, and yet you want to buylong-term care insurance. (woman)No, I really don't,but
I want to make sure that… [laughter] Do you haveany student loan debt? No. What is the interest rateon your credit card debt? It's like 16, 15. Do you contribute fully to
your retirement account? Yes, Roth IRA. How much do you havein your Roth IRA? Uh like 45,000. (Suze)And how much do youin credit card debt? 4,000.(Suze) 4,000. I have $4,000 at 16 percent, I have $45,000 of how much of thathave
you originally contributed? When I first
started it? So altogether it's worth 45,000,how
much of that has it grown, have you put in 30,000and now it's 45,000? Oh no, I started with like1,000, 2,000 and then I deposit 550,my max every month.
But you put at least $4,000
ofthat, you put in of your money. (woman) Yes. (Suze) Alright,so listen to me now. I want you to withdraw from your Roth IRA $4,000 and I want you to pay off your credit card debt. How can I guarantee you a 16
percent return on your money? Pay off your debt. (woman)I thought I'd get penalized for… That is why this show is so important. Any money that you originally put into a Roth IRA, the money that you deposited into this account, you can take out at any time
without taxes or penalties, regardless of your age or how long the moneyhas been in there. It's the earnings of that money
that have got to stay in there for at least5 years and until you
areat least 59-1/2 years of age.
Then you can take it all out, tax-free. But I would much rather see you take out $4,000, get rid of the debt. Does that debt make you feelinsecure? (woman) Yes. If you want to be secure, which I'm telling is the goal of money, you have got to get ridof the things that make you feel insecure. So you have the money to get rid of that which makes you feel insecure, and that money is supposedly supposedto make you feel secure but it's not making you feelsecure
'cause you feel insecure, so let's take money from here, get rid of what's making
youfeel insecure over here. Now you feel secure,and when you are secure you are more powerful,and when you are powerful you attract peopleand people pay you, people give you a job
promotion,people are your customers. So when you are more powerful,you attract people, people control money, now
you'regoing to control more money. Got that? (woman) Got it. (Suze)That's what you're going
to do.(woman) I feel more secure.
[applause] So I just want to touch brieflyon
long-term care insurance. Long-term care insurance may be one of the most importantinsurances you will ever buy in your life. And the reason is this: your health insurance does not payfor a long-term care stay, Medicare doesn't reallypay for it. You will be the ones that
payfor a long-term care stay out of your own pocket. And when you look at the cost, it's 10,000 a month,15,000 a month, it is a lot of money.
The average age of entryinto a nursing home is 84. That age is key. Why? 'Cause if you buylong-term care insurance, you have to knowthat you can afford it from the yearthat you purchased it all the way until age 84or longer. Should you be buyinglong-term care insurance and going, but Suze I doubtI'll ever use it. What insurance do you buy in the hopes thatyou're going to use it? Really, do you want your hometo burn down? Do you want your carto be in an accident? But you all carry insuranceon that. One out of three of youwill spend some time in a nursing homeafter the age of 65. Now, a lot of you know when it comes to long-term
careinsurance, that premiums, if you have a long-term careinsurance policy, has skyrocketed on youover the past few years. So if you buy long-term careinsurance, you have to factor inthat if
you're paying$4,000 a year for it, you may be paying $8,000 a
yeara few years from now. Can you afford it? But I can tell you this: that out of all the yearsthat you pay for your premium, it will beless than you will pay for one year in a nursing home.
So if you can affordlong-term care insurance from the time you purchase it,all the way through, I would absolutely go aheadand do so. Alright, we are going to takea
break, and when we come back, I'm going to continueto answer your questions. [cheers & applause] Thank you! Alright, let's take a question. I have a good-looking man right there. Yes sir? Hi Suze, welcome to Miami.(Suze) Thank you. With increased longevity, and
ifone does not have a pension, how does one knowwhen to retire? Because I'm really not sure
onecan really measure that because we don't know how longwe're going to live and I'm not necessarily surewe
can save enough to retire.
Great, let's talkabout your life expectancy. My mother, God rest her soulnow, 7 years ago, lived till 97 years of age. The most important thing
thatyou should all understand in reachingthe ultimate retirement is that most probablyyou are going to live until your late 80s,early or late 90s. And that actuarially speakingis the truth. So it's not like it was back
inthe '30s or '40s or years ago when Social Securityfirst came about, when you couldn't get
SocialSecurity till you were 65, but did you know that the average life expectancywas still 62? The buggers never expected youto live long enough to collect Social Security! How do you knowwhen you are ready to retire? Alright, so let's talk about that. Financially ready and emotionally ready are two different things.
'Cause you might be readyfinancially to retire, and emotionallyyou might not be ready to lose your identity of what you do. So they're two separate things that you have really gotto have clear. So let's just talk about
thefinancial aspect of it now. You have got to be very aware of what your expensesare
going to be in retirement. You have got to know, what does it cost youto pay your mortgage, your car payment,your electricity– everything that isan absolute expense, that is not going to go away.
Once you know your expenses,then you have to know what are your steady streamsof income that will be payingthose expenses. If you have a pension,if you have Social Security, if you havethe minimum distributions from your retirement accounts that you are going to have tostart taking out, if you have an income annuity,whatever it may be, will it cover your expenses,or will it not? Hopefully it will,because if it doesn't, then you have tomake a decision, do you need to continue to work? Should you retire from the jobyou currently have and take on another job? You have to decide all of those
things, but in the equation, here's what I want to sayto you– Social Security.
'Cause for the ultimateretirement,
the biggest decision that you are going to make
iswhen to take Social Security. And do not takethe easy path here. You are to wait till at
leastfull Social Security age. Now I know a lot of youare like, no way, I get Social Security at
62,and I'm going to take it. Do you know that if you
waitedfrom 62 to the age of 70 to take Social Security,you
would get 76 percent more than if you took itat the age of 62? So when you arefiguring out
your incomeversus your expenses, do not include Social Securityuntil you are 70. I would rather see you use
upmoney in a savings account or a retirement account to
getyou through all those years than for you to takeSocial Security earlier to get through those years.
Why? Because especially from
the ageof 66 or 67 till 70, you're guaranteed an 8 percentincrease every year. You're notgoing to get 8 percentin
the stock market guaranteed. You're not going to get8 percent in
a certificateof deposit right now. The new retirement age,seriously, should be a minimum of 70 today. I know, it sounds like, uh! But you know whythat sounds terrible? Because you hate the jobthat you have.
[laughter & applause] If you loved what you did,if
you felt like you were a vital part of societyas well as your own life, if you did not have one footin your money boat and another footin your personal lifeboat, but you were in one boat,and you were steering it where you wanted it to go, you would not be upsetabout
having to work till 70. You would actually be sayingto yourself, I hope I get to work
forever,forever, 'cause I love it! I hope I get to do this forever. Do you think I do this 'causeI
need to make money? No. So the goal of you working,
Iknow you think is to make money. And it is that,but it's also because you lovewhat you are doing.
And it makes you feellike you have a purpose. Because what's interesting is when you can't define yourselfby
what you do, your job title, and then who are you? You need to know the answerto that question. We have a question right here.Yes sir. Suze, I wanted to knowhow to go about finding one's ideal financial advisor. That's a good question. A really great financial advisoris somebody who's been a financial
advisornow for 15 or 20 years. They have seen up markets,they
have seen down markets, and then they've seen up again, good economiesand bad economies.
The very first thing they tellyou
is here's how much I charge. Here's how I work,here's what I'm going to do, and then they should at least beinterviewing you for an hour or twoto understand. Are you afraidof the stock market? Do you feel goodwith the stock market, are you happy in your marriage,are
you going to inherit money, are going tohave to take care of
yourparents, do you have a will, do you have a trust, do you
haveany credit card debt, do you own a home, do you
wantto own your home outright, do you have kids, do you want
toleave money to your kids? They should be asking youevery possible question, everything in your life,
becausethey have to know who you are as a person before they
caninvest your money for you.
Here's what you really needto understand about finding an advisor. You should never talk
yourselfinto trusting anyone– ever. When going to seea financial advisor, if it doesn't feel right,guess what? It's because it's not rightfor you. But what do you do? You talk yourself into
trustingthat person– big mistake. So do not do that. Get up and walk out. Don't be guided to have
somebodybe a captain of your boat and take you where they want
itto go versus yourself. You have got to belike this woman here, with this captain's hat on.Right? And you have to knowthat your financial journey into your retirement yearsis started where you have chartedthe right course. You don't want to bedoing something just because some financialadvisor
tells you to do it. It's got to make sense to you, it's gotto make sense to you. Next question, who has one? Yes. Hi Suze, thank you for coming. I've followed yousince the beginning, your first book,it's so old, but I… (Suze)That actually wasmy second book, but that's beside the point. But lookat that picture on that. I want your signature today That picture on that bookwas taken in 1994.
Don't you think I look betternow? (woman) Yes! [applause] Gorgeous. But what isyour question for me? My question is if you already,well,
I was fortunate enough to have a pension plan,but it was way before the Roth IRAand all that existed. If you've got quite a bitof funds in that IRA now and you have to roll it
overinto a Roth for tax purposes and for your beneficiaries,
butwhat about that lump sum tax that you have to payon that money? How do you getthat large sum of money? If I were you,here's what I would do. If you have a lot of moneyin a pension or a retirement account
that'spretax, first roll it over custodian to custodianto an IRA rollover, no tax. Then little by little, if
youwant to convert it to a Roth, after consulting a CPA, decideon
how much you can convert each year without it affectingyour tax bracket. The last thingyou would want to do is to take a large sum of money and convert it,have to pay taxes on it.
Also, if you are near retirementand
you don't have at least 10 years to recoup the taxesand
the growth on the taxes, do not convert it to a Roth. Leave it in a traditional. Just because Suze Ormanloves a Roth, sometimes it makes senseto leave the money that you have in a traditionalretirement account because you're going toretire in 2 years. So if you now convert itto
a Roth, you're going to be losing all that tax money,you're better off just leaving it where it is,and
paying the taxes as you go. 'Cause either way,you have to pay taxes. So when you convert, you
wantyour money in the Roth for a long timeto recoup the taxes with the growththat you will sustain. Next question,who has a question for me? Hi Suze, you mentioned
bewary of insurance products, can you elaborateon that please? Oh you betcha I can. Insurance is insurance,investments
are investments, and the two should not cross. Years ago, when everybodywas buying mutual funds and making all this money, when all mutual fundshad a commission to it, the insurance companieswanted to get in the game.
They were like, man,maybe we can create a product and sell it to all the peopleout there who want to investin the stock market and make it seem like it's
morebeneficial to do it that way and we'll captureall of that money. Now, I have been licensedover my career in almost every single stateto sell insurance. Actually, not to sell insurance,to bash it as to why most of youshould not buy it when it comes to an investment.
I personally thinkthe only type of life insurance that makes sense,is term insurance, term insurance that's goodfor
a specific period of time. Universal, variable,and whole life insurance are the worst investmentsyou
could ever buy, bar none. They just don't make sense. So many times they're soldto
you as– you can invest in such a wayand have it all be tax-free and experience the stock
marketand get life insurance. The commissionson most insurance products are so high, you have no idea. Possibly 70 to 80 percentof
your first-year premium. But today, you now havebrokerage firms out there that are charging you no commissions at allto buy stocks, no commissions at allto buy exchange-traded funds, no commissionsto buy mutual funds at all.
Are you kidding me? If there was ever a timeto want to be investing in the stock marketcommission-wise, now is the time. So does that make sense to you? Investments are
investments,insurance is insurance, do not mix the two, do not mix the two ever,in my opinion. Next question. We have a question right here.Yes sir. Hi Suze, what's your opinionon
target retirement funds? Yes, a target retirement fund, which is how many of youinvest for retirement, thinking that that fund is going to give youyour ultimate retirement. I personallyam not a fan of them. And a target fund, just to
beclear, is that you decide the yearthat you are going to retire. You target the yearof your retirement. Then this mutual fund isinvesting
your money to do what? For you to be ableto retire on that date, and the closer you getto that date, the more moneythey put into bonds, the less money they putinto stocks.
So they do all the work for you. And it is one of the mostpopular
investments out there in 401(k) plans because
youdon't have to do any work. You just put your money inthis
target date mutual fund, and you just let it go. I'm somebody who doesn't
liketo go on automatic pilot. I'm somebody whowhen I'm about to retire, I want to look at whatthe economy is doing and maybe it's a good timeto
do what, to be in bonds, but maybe it's a better timeto be in stocks. Let's go back to 2008, 2009. If you had had a targetmutual fund for 2009, 2008, you would have been mostlyin bonds at that point. Great, so you didn't get
killedin the stock market. But in 2010 and 2011 and
2012and 2013 and 14 and 15 and 16 and 17 and 18and 19 and 20, you missed one of the biggestbull markets ever. So should you have been in bondsduring that time or should you,even though you had retired, should you be in the stock market? Because you all have to keep upwith inflation.
And inflation is somethingthat is very serious. So your ultimate retirement,
andlisten to me closely here now, is one thatwhen you actually retire, you do not wantall of your money in bonds. You want some of your moneyin stocks because even though stocks maygo
up, and stocks may go down, in the long run, you will berelatively okay, especially if they aredividend paying stocks, so that you are ableto get income while the market is going down.
So please don't be one ofthese
people that go to retire and you go totallyinto bonds. Next question. (woman)Hi, good afternoon,I have two questions. The first question actuallyis the follow-up to the whole life insurance,that
question is for my mom. After she heard what you
saidpreviously, she had a question. And the second questionis mine about annuities. So my mom's question about
thewhole life, she has two policies and being in her 60sshe wants to know now, what insurance should she getbecause now she's not very pleased
withthe whole life insurance? (Suze)Because Suze Orman said
that.>> Because Suze Orman said that.
Here's the question,watch this interaction now. This is a good financial
advisorasking the question before I answer a question, because I can't just answer
herwithout knowing things. Does your mother,in her opinion, need insurance? Is anybody financially dependenton her? If your mother were to die,is
anybody– where's Mama? Right there.(Suze) Mama! Too shy to askher own question. (Suze)I'm not answering it.
Mama! Okay, answer my question,answer my question. No, no, Mama, come on down,come on down Mama. [applause] Mama talk to me! Hi Mama.
Hello. There you go, so Mama,if you were to die today, is anybody financially dependenton you? No. Why do you have insurance? I have it because I don't want
my kids to be responsible. Yes, but if you die, your
kidsaren't going to be responsible for you anymore'cause you're dead.
Right? (mama) True. You want them to appreciateyou while you are alive and enjoy youwhile you are alive. So do you have this policysimply
to pay for your funeral? Absolutely. Alright, and how muchof a death benefit is it? It's 10,000 on both. (Suze)So you have two
policies.(mama) Two policies. And how long have you beenpaying on it? (mama) For five years now.(Suze) For five years and how much does whole lifeinsurance cost you? Per month? (Suze) Yes. $56 a month. So that's $600,almost $700 a year, so you have already paidin $3500 in 5 years to have $10,000 of insurance,and as you get older, 'cause you're still young,you're in your 60s. (mama) 69. (Suze) 69, and so you're not projectedto
die for another 30 years. Yes, my mom is 94.
Alright, so you're going to benow paying $50, $56 a monthfor all those years. Really? I don't think so, what isthe
cash value of that policy? If you were to cash it
outtoday, how much is in it? You know, I really didn'tdo the math. Alright, so you're going to
findthat you put in $3500, however, good luckif you have $1000 in there. (mama)Yes, that's what my daughter was telling me. So here's what you're going to do. We know you're healthy, we know everything's good. What would it feel like to
have$1000 to your name right now? Because, if you're worriedabout
paying for your funeral, that says to Suze Orman,you don't have any money.
(mama) Yes,
I realize that now. Alright now, guess whatwe're going to do? We're going to cash outthat whole life policy, first you got to make sure Mama's healthy, if Mama's healthy, we're going to cash out that whole life insurancepolicy,
the insurance agent might say, but the taxes–no
taxes– you put in 3500, you get back less than that,no taxes, and you're going to put
thatmoney into a savings account, a high-yieldmoney market account or savings account onlineand just watch it, and then you're goingto take the $56 that you wereputting towards the insurance and you're going to put it
intoyour own savings account.
And before you know it, you'regoing
to have $10,000 in there. And then you'regoing to have $20,000 and then we're goingto go out to dinner Mama! Yes we are! (mama) Thank you. (Suze) That's what you'regonna
do. (mama) Thank you. And Mama, I just have to
askthis, was that that hard, to stand upand talk for yourself. Oh no, no, no, I didn't knowshe was going to ask, I was just mentioning itto her up there. (Suze)She said, you said right, that she was afraid,one of you is lying! Right? Have I got this right?One of them is lying.
The daughter is standing theregoing uh-uh, she said I ain't gonna do this. Alright, that's fine, alright. I was, I was. [laughter & applause] (Suze)Alright, your question. (woman) I've been looking into annuities, and I wasn't sure if it's
a smart thing for me to do. Why were you lookinginto annuities. Because after readingall of your books, I was trying to be preparedfor my retirement. There is no way that you reada book by Suze Orman that said to buy an annuity!. (woman)No, I know, I know,you
did not recommend that, but I wanted to be prepared,so
I looked at everything that's availableand everything possible. So I'm asking your opinionright now. So here's whatI would tell you– annuities are startingto change. Index annuities okay, singlepremium
deferred annuities okay, variable annuities I really
donot like on any level, although even those arestarting to change. Here's what I do wantto tell you, and you're going to be surprisedat this. Remember how I stood up herebefore, and I said, "What I used to tell you
beforeI'm not telling you now." You know how you told me,a
lot of you raised your hands, you said that you're afraid
thatyou don't have enough income and you don't know whatyou're going to do.
It is possiblethat an income annuity where you deposita specific sum of money and they pay you outa monthly income is something that you may allneed to look at as you get older,and you want to retire. Would you be doing that now,given that Mama's 69, that means you have to be
what,how old? (woman) 47. (Suze)47, way too early for you to be thinking about thison any level. No really, the way you would
bethinking about it would be I want to be out of debt,I
want to own my home outright, I want to be saving moneyin my Roth IRAs, I want to becutting down on my
expenses,I want to do all those things far beforeyou would do an annuity. Okay? You know,I just want to say this. I only wish I had a magic wandthat I could wave and say to all of youin this room and all of you and the millions of you
that will see this program, that I can wave my magic wandand make it all so that you are never ill,never in any situation where you hadany financial distress, and you had all the
financialindependence in the world, and that everything wasgreat for you.
I don't have a magic wand.But guess what? You do, you have a magic wandfor your own lives. You might think that you don't. You might think well,what difference can it make if I make this little wave
here,and I do this wave here? Every little actionthat you take can make a tremendous differencein your life. Can you all livethe ultimate retirement? You can,but you have to want to. And you not only have to wantto,
you have to take the actions that absolutely make itpossible, which means you pay off the mortgage onyour
home, you get out of debt, you start to haveRoth retirement accounts, you do everything today,
yousell something, you downsize, you do whatever, but you have
tohave a plan for your lives. So we have just answeredmany of your questions, and we have one more segmentto continue to do so, so that all of you can havean ultimate retirement. We will be right back. So in terms
of an ultimate retirement, if I were to give you one piece
of advice, as to how do I make the most
out of my money, Suze Orman? With interest rates low, I don't
want to be in the stock market, what should I do?
Ready for this one? Pay off all of your debts.
It should be mandatory that
if you own a home, that you own it outright
by the time you retire. If you do not, and you plan
especially to stay there, you are making one
of the biggest mistakes in my "Ultimate Retirement"
playbook. Because if you could simply
get rid of your debt, the more debt
you have gotten rid of, the less income you need to pay
the expenses on that debt, and now you can start to make
more out of your money. Now, for those of you who have
retirement accounts, you probably have a traditional
IRA or a traditional 401(k) or 403(b) because you wanted
the tax write-offs today.
And you just didn't want
to pay taxes today. Big mistake. In my retirement playbook, I would have
all of you in Roth IRAs, Roth 401(k)s, Roth TSPs
if you're in the military, Roth 403(b)s
if you're a teacher, I would have you
in Roth accounts. Why? Because everything
that you have in a Roth, you give up
the tax write-off today and you get to take that money
out later on tax-free. With a traditional
retirement account, you get a tax write-off today,
but when you go to take it out, you have to pay
ordinary income taxes on it. You all want
that tax write-off today, even though we are in
the lowest income tax brackets in the history
of the United States.
So you have all got
to start to think different. We're not 40 years ago,
we're today. And the rule of thumb is this: you want to know
what you see is what you get. What good is it going to do you if you have all this money
in all these retirement accounts that you're going to have to
pay taxes on when you retire and they force you to start taking money
out of those accounts, April 1st of the year
after you turn 70-1/2. So what is Suze Orman
telling you to do? I want you to do a few things. If you know that you are going to have a mortgage
when you retire, and you are going to be
keeping that home, I want you to continue to contribute
to a retirement account that matches your contribution
up to the point of the match and then everything after that, I want you to pay down
the mortgage on your home.
That guarantees you
to be debt-free, you don't have to then worry
about the stock market, or interest rates, and nothing
will make you feel more secure in life than
owning your own home outright. Now I have said in most every
single show I have ever done, that the goal of money is
for you to be secure. So you have got to look at
your lives and ask yourself, what in your life,
financially speaking, makes you feel insecure? Because whatever makes you feel
insecure, you have got to remove from your life
so that you can feel secure. Got that? Who in this room
would feel more secure if you owned your home outright?
Raise your hands. Well, now we have almost 100 percent
participation. [laughter] So that's what you are
looking for. These are all things that you
need to figure out on your own. That you can look at this
and go, what can I do so that I have
the ultimate retirement? And what you can do is
to make little moves today– pay off the mortgage on your
home, have Roth investments, know that you're going to claim
Social Security at 70.
Decisions like that
will change your entire life. Next question,
who has the mic? Yes. Hi Suze.
Right here, it's Mama Bear. Thank you Suze. I hope I'm right on that right?
Yes! [laughter] I'm 34 weeks pregnant. I've actually been a fan of
yours since I was 15 years old. I read your book,
Young, Broke… "Young,
Fabulous, and Broke," yes. That book. I currently maxed out
my retirement accounts, I don't qualify
for the Roth IRA, we're going into this stage, so my question is
surrounding the 529 plan versus the prepaid college,
which is better? And do you have
any credit card debt? >> No.
>> Eight month
emergency fund? >> Yes. Absolutely, and you're
contributing now. That's what happens
when a 15-year old… [cheers & applause] …watches and readsabout money, and then here they arein a situation where we all wish we could beand
turn back the hands of time. So it's never too soon to begin. It is never too soon to begin. I like both a lot. If your child's goingto go to a school like in Florida or whatever,I
like prepaid plans a lot because it takes outall the thing of is the market up, what should
Iinvest in, what should I do? And when you have kids, and
youhave everything going on, unless you wantto deal with all that, then a prepaid plan is probablyhow I would go.
If you like investingand whatever, 529 plans are equally as good. But here'sthe question back to you. You're aboutto be a parent, do
you havea living revocable trust? I do not. Do you know that minorscannot inherit money? I did not. So if you have a child,and
you have all this money, your 401(k),everything that you've done and now you want to leave it, you and your spouse in a
caraccident, it happens everybody. And now you want to leave thatto your children. It will go in a blocked accountuntil
they're 18 years of age. If they hada living revocable trust, you would namea successor trustee as to who would watch over
thatmoney for your minor children. Very important for you to have.>> Thank you. And most of you in this room,do not have the most important documentyou
could have, bar none, a living revocable trust. A will is simply a documentthat says where your assets are to goupon your death. That is all it does. And it does it in the most
costand effective way possible. A living revocable trust, living, you do itwhile you're alive, revocable, you can change itanytime you want.
Trust is the nameof the document. While you are alive,you transfer your assets, the title to your home,your bank account, your stock brokerage accounts,whatever it may be into the title of the trust, held for your benefitwhile you're alive, and your beneficiaries'
benefitafter you have died. What is the differencebetween the two? A will has to be probatedin most circumstances. That can take months, it
cancost thousands of dollars, it absolutely,that's all it does. A trust, 2 weeks later, 3
weekslater after you've died, everything passes to
yourbeneficiaries free of probate. But that's not the reasonyou should get it. The reason you should get
itis because of incapacity. If something happens to you,who's
going to pay your bills? Who's going to writeyour checks for you? Who? A willjust says where your
assetsare to go upon your death.
A trust, a good one, that
hasan incapacity clause in it, says that somebody elsecan sign for you when you no longercan sign for yourself. And this is important. The other day, I was in the
banktaking out some money and this really old womanin
her 90s was standing there and she said to the teller,she said, "I have to ask you a question, how much moneydo I have left in my account?" And the teller told her. She said, "That's impossible,it's impossible, "I know how much money I shouldhave in there "and that's not what's in there. "And I kept gettingthe statements, "but I couldn't believewhat I was seeing "so finally I thoughtI should come in. There has to besomething wrong." Now, either she's spending
moneythat she doesn't know, or possibly somebody isripping her off of money. But do you understand how not only do you have to protect yourselves as you get older, but every one of you in this room should be protecting your parents as well.
Your parentsthat become
vulnerableto all kinds of people that befriend them and then doall kinds of things and before you know it, all this money is gone. So a trust is possibly the most important documentyou can have, bar none. You know, I'm just wondering,is
anybody in this room afraid of when you get older you're not going to be ableto pay your bills, and you're going to be dependenton your kids? Does anybody in this roomhave that fear? All right, you do, you do.
Can somebody talk about that? I would like to hear somebodyaddress that. This woman right here,all right, you have a fear. Yes, I was… You can put your purse down. [laughter] So I have
a 99-year-old mother, which getting back to the
lifeexpectation means that you know, I supposedly have quitesome time ahead of me. I have no kids, I have
no long-term insurance, I have no debts. So I don't know who's going to take care of me. I lost my job 3 months ago,
which I needed for living. My mother and I
own an apartment where she lives right now, and I rent another where I live
with my husband. I have a 401(k), I have a CD,
and I have a savings account. (Suze)So you're afraid. Of course I'm afraid and
as I said, I have no kids, so nobody to
look after me.
And how oldare you? 73. You're 73, and what do you dowith this fear? Like who do youtalk to about it? I'm serious 'cause how manyof you in this room can relate to what this womanjust said? So do you see first of all that you're not alone,you're not alone. Most of America is inthe situation that you're in, where we are getting older,we
don't have any money, we don't have kidsor if we do have kids, they need us to take careof them, [laughter] and good luck themtaking care of us.
So what do we do, where do we goto start this conversation? Here's what I wantto say to you. 73, so obviously you've startedSocial Security. What you have to dois understand that 73, even though I know it
feelsolder, 'cause I get that, 70's a big one, it's big numberto
pass, even approach up to. Is thatyou're still in the youthof
your life if you're healthy. So there are all kinds of thingsthat you can do, whether it's continuing to
work,saving money in a Roth IRA, making sure that youdo not have any debts, but fear is the maininternal obstacle to wealth and the only way to conquer fearis through action. Now, the actions that you aregoing to take are particular to your situation,and
you're going to have to sit down with your husbandand go, what can we do? Should we rent a smallerapartment right now? Should you sell the homethat you have right now and downsize now,'cause what happens is we keep putting off all of
thesedecisions until we're older and older and older 'cause
wedon't want to have to deal.
Rather than making a decision
oflet's sell the house right now, let's move to a placethat's less expensive, let's take the differenceand do it. Oh, I'm renting, alrightI'm
renting a 2-bedroom place right now, let's renta one-bedroom place. Oh, I'm renting a one-bedroomplace,
let's rent a studio. Oh, we have two cars,let's go to one car. So you have to now becomea warrior and you have to not turnyour
back on the battlefield. And the battlefield isknown as retirement and how are you going to payfor yourself. So you're going to start to
givebirth to financial children by the name of Bill,Buck, and Penny.
[laughter] That's pretty good! [applause] And you're going to have to
makedecisions with your husband. What can you do,and I don't care if it's to save $100 a monthhere,
you cut your cable bills, you do whatever it isthat you can do to save $50 here, $100
there,and you would be amazed at the more moneyyou start to accumulate, the more secure you'll feel. But you do nothing and you
havenobody to talk to about it. So here's who you'regoing to talk to about it. You're going to talk to yourselfabout it. And you're going to be the
onewho solves that problem. And you're going to be the
oneto figure out what you can do to either make more moneyas well as spend less. 'Cause the key to the
ultimateretirement, everybody, is not to save more,but it's to spend less.
'Cause if you spend less,you're able to save more. And the key is stop postponingspending less. You don't think $25 here
and $50makes a difference. It all adds up. As soon as you starttaking more action, you'll start feelingmore powerful. And then that fearwill start to go away and then you'll have more
energyto take more action. Alright, there you go, alright. Thank you. [applause] Yes ma'am. (woman)Thank you so much for coming. I've been watching you for years. I'm the senior, I guess, in the room. I'm 80 years old, my husband is 91. We've been contributingto
Roths since they started. But we didn't get a chanceto contribute very long because then we retired.
But I've passed your
informationdown to my children and they are contributing. My question is,I have grandchildren, I have two daughters,I'm
leaving everything to them. What I need to know right
now.is there any way that I can, at my age,or should I start converting some of my traditional IRA fundsto a Roth? Alright, so you have been, because you are nowolder than 70-1/2. (woman)I'm 80, yes. You have been taking requiredminimum distributions from your traditional retirementaccounts, correct? >> Yes.>> And paying taxes on them. >> A lot of taxes.>> A lot of taxes. The answer to your question is,are your children and grandchildren in a
lowerincome tax bracket than you? Because, when you leavethis money to them in a traditional retirementaccount,
and they take it out, they're going to have to
payordinary income taxes on it.
Truthfully, in your situation,at
where you are right now, in retirement, I would
leaveeverything where it is. But is this your granddaughternext to you. (woman)This is my daughter. (Suze)Your daughter,well, that was a compliment. [laughter] I didn't meanto give you a compliment. She came from Orlando to join
mefor this occasion. [applause] Can I talk to your daughterfor one second? So here's what I wantto hear from you. Mommy and Daddy have doneincredible. When you sit here and
listen,and Mommy starts talking about her death and that,how
does that make you feel? Just sad, I want themwith me as long as possible. (Suze)Yeah, and do you yourselfhave children? 'Cause Mommy saidthere's grandchildren.
That would be my sister. Your sister, so whenyou look at your own life, and you see what Mommy and Daddyhave done, can you just tell me howyou feel about your life? When you look at your lifeand retirement? Actually I'm blessed tofeel secure. (Suze) Great. They weregreat teachers. (Suze)Great teachers,so you learned from Mommy. Mommy, out of all the
thingsthat you did in your life, out of all the moneythat you saved, the proudest you should
beand the most priceless gift that you've given yourselfis that you have a daughter that
feelssecure because of you.
[applause] And that is the gift that all of you need to pass onto your children, your beneficiaries, as well
asyou having the conversation with your parents as well. And I can stand up hereand
talk to you about money, as you could tell,from now until eternity. There really isn't one questionthat
you could possibly ask me that I don't know the answer
to,and I think I've proven that to you over all the yearsthat I've done this. But the greatest departing gift, when I talk about the Ultimate Retirement, I'm talking about happiness, I'm
talking about inward happiness, and you knowing who you are,
as well as you have a family that appreciates you, and you appreciate them. And if you're out there, and you're all alone, and you have nobody else, youhave
to at least have yourself.
So the "Ultimate Retirement"
isone where not only do you know everything you need to knowabout money, but you need to know
everythingabout your own life, the purpose of your life, who you are when you can'tdefine yourself by everything around youas well as your job title. You have to know these things. I hope you enjoyedthis journey with us today, I hope you learned enough toat
least start you on the road to an "Ultimate Retirement"
andreally, may retirement one day bless each and every one of you
and may God bless you as well. Thank you so very, very much. [cheers & applause] [piano, bass, & drums play in bright rhythm] Captioning– Armour Captioning & TPT.
7 Ways One Simple Action Improves Retirement
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
– In this video, I'm
going to blow the lid off of the most common
mistake made in retirement and in the process bring
clarity to your next move if you carry a lot of debt. Coming up next on "Holy Schmidt." – Holy Schmidt! (object splats) – Recently, I ran into a friend of mine at a hotel lobby in Chicago. He's someone I hadn't seen in years, but someone that I had always
meant to keep in touch with, so it was great seeing him.
We got on the subject
of debt and it was clear that he had read a lot of the
books out there on finance. He talked about good
debt, bad debt, no debt, an emergency fund, all of it. But the problem was, in the discussion, it was clear that he was
misapplying many of the concepts. He had read the words in the books, but he actually had not
applied them correctly. One particular point in the
conversation was very tense. He said to me he would rather have $50,000 in low-risk securities
and $30,000 in debt, even credit card debt, as
opposed to having just $20,000 invested in low-risk securities. When I asked why he thought this, he used some strange
end-of-the-world example and said to me that, "If
we're all living in caves, and this is the end of the world, I would rather have $50,000
in cash than $20,000 in cash because the credit card companies would have a lot more to worry
about than little old me." (thunder claps) "Okay," I said, "But if you're living
life in the real world, you have real credit card companies that have debt collectors that go out, and they try to collect the debt.
They actually put a judgment against you. And if you have a judgment against you, they can put a lien on your assets, particularly your checking account, at which point you won't have any cash because everything in there
will go to pay down your debt. He looked totally confused.
So I help him translate. "If what you're saying is that you would rather pay your grocery bill than your credit card bill, I get it. That will last about a month, maybe two, before things start to go horribly wrong. But let's assume that you are
not being hunted by zombies. (zombies snarling) And you're not trying to determine what the best currency
is in the apocalypse. (knife sharpening) Debt is real, and it needs to be paid." Here's why you should have
no debt in retirement.
By the way, if you have
debt, even a lot of debt, I've got you covered. There's another video
that I have, outstanding. I'll put a link in the
description below that you can use to get rid of your debt
very, very quickly. But I digress. Let's
get back to this video. First, for those of you
who think like an investor, you'll know that the higher the return, the higher the risk, generally speaking. If for example, you invest
in US government securities, that means your investment is as safe as the US government itself, that is, if you hold your
bonds until maturity, and you don't sell them
in a choppy market.
(cow bell ringing) But assuming you hold your
government investments until maturity, the five-year US government
note is currently paying (keyboard clicking) 3.39% as of five seconds
ago according to Bloomberg. On the other hand, if you invest in high-tech
Silicon Valley startups, your return could be
15, 20, 30, 50% or more, or you could lose it all. That's how high-risk investments work. But what if you could get
US government type risk and Silicon Valley type returns? (cash register rings) Well, that is the best of both worlds, and there's only one way
you can really do this, and that's to pay off your
outstanding credit card debt. Let me explain. Imagine that you had $10,000 to invest, and you could either put it
towards a dividend paying stock that paid a 4% dividend. That would be a very good
dividend, by the way. Or you could use it to pay
down your credit card debt, and let's make the math
easy for this example. Let's assume that your credit card company only charges you 4% on your credit card, but whether you had a
4% dividend paying stock or you had a 4% credit card, your cash flow would look about the same.
You would just use your dividends to pay off the interest
on your credit card. Of course, dividends are
actually paid semi-annually or annually, and credit card
payments are paid monthly. But let's ignore that for just a moment because the point of this is not that. The point of this example is that if you had $400 of dividend income and you use that to pay off the
interest on your credit card or you didn't have $400 of
interest on your credit card, the cash flow would
look basically the same. Now, this is where people
get confused. (blows) Earning $400 of dividend
income is not better than avoiding $400 of expenses, and credit card companies don't charge 4%. In fact, they charge between
18 and 23% on average. In fact, the average according
to Wallet Hub is 19.07% as of today.
(whip whips) So your return on investment
is 19% in this example, not 4%, and it is as guaranteed as the government interest
on the government bonds, maybe even more so 'cause if you don't owe debt, you don't have to pay interest on debt.
That's guaranteed. Is the dividend guaranteed? Nope. In fact, the company can
cut the dividend tomorrow, or they can go out of business, and you can lose all of your money. Now here is the sinister
part to all of this. If you receive a $400 dividend, do you have to pay taxes on it? In most cases, unless it's in a Roth IRA, but if you avoid $400 of expenses, do you have to pay taxes on
the expenses that you avoid it? No. In almost every example,
you'll have more spendable cash if you avoid paying a dollar of expense rather than receiving a dollar of income.
Now add a bunch of zeros onto that, and it becomes real money, which brings us to the next point. Even a modest improvement in cash flow improves your retirement
picture pretty dramatically. Here's why. When you're living your life, the fun discretionary stuff usually comes from the last 5, 10, maybe even 20% of your monthly income. The average retiree who carries debt spends 38% of their income
to service that debt. Now imagine what you could
do with 38% more income, particularly noting that the
last part of your cash flow is what's used to pay
for all of the fun stuff. Then, and this is big, if you
have an extra 38% in income, this is a great margin of safety cushion in case something goes wrong. This happened to many of us recently. In 2022, the average retiree
lost between 15 and 20% of their account value if they had their assets
in a target-based fund, which is over 80% of retirees, by the way. If this was that type of year,
(warning bell alarms) and you didn't have that cushion, this would mean that you'd
have to continue to sell assets at a reduced price and
crystallize the losses just to sustain your life.
But if you're like my friend
Rulph from the Chicago Hotel, you're going to use that extra cash flow to build your apocalypse fund. The rest of us call it an
emergency fund, by the way, but whatever you wanna call it, it's something that you
can designate as extra cash in case the world changes
on you all of a sudden. Importantly though,
you're using your assets to pay down your debt, so
that's taking a step back, but that will allow you to
take multiple steps forward because you're not paying
high interest on that debt, and you have extra cash flow to rebuild your emergency
fund the right way. Next is just the effect of
having debt in your life and the effect it has on
your health and wellbeing. Let me explain. I am personally in the middle of several weeks of a very
challenging point in my life. Now these challenges are good challenges because I'm pushing ahead on
projects that are important and the end result is that they will yield some incredible outcomes for both me and for other people.
But it is really stressful,
as you can imagine. And while the outcome will be great, this is a lot harder than
just doing regular work. But here's the most important thing. At the end of these projects, there will be a lot of celebration (fireworks exploding)
both for me and for others. They will have a very
positive outcome at the end, but if the stress wasn't due to something that would conclude at a point
in time and conclude well, imagine having to deal
with that level of stress every single month. This is what I'm talking about. The debt holder is worrying
about how to afford life. It's not a carrot, it's a stick, and this worry goes on at the
end of every single month. This can very quickly affect your physical and mental health. Next, this will improve your relationship with family and friends. Imagine being able to
spend more time and money on those that you love, your spouse, your kids, your friends, being able to go out more
often, do more things.
Most relationships that end
end for one of a few reasons, money being one of the big ones. So if you're taking the
money issue off the table, or at least moving it to
the side a little bit, relationships tend to get better. We talked a lot about credit card debt and personal debt in this video, but the question always comes
up when talking about debt, what about mortgage debt? Well, there are two answers here. The first is the mathematical answer, and the other is the personal side answer. Mathematically, if you have a mortgage that's 3 or 4%, and
inflation is running at 6%, well, there is an argument to be made to keep that debt outstanding
as long as possible, but imagine how you would feel
if you had all of that debt from the mortgage
redirected into your life. That's the personal side, and that's the side that most
people actually care about. If you like this video,
check out that video.
It's a video on where retirees spend 80% of their income in retirement, and it's one of my most popular. This is Geoff Schmidt.
Thanks for watching..
The $65,000 Roth IRA Mistake To Avoid
Jason 0 Comments Retire Wealthy Retirement Planning
– I've seen too many of
you making some mistakes when it comes to investing
in your Roth IRA. One of them could cost you
$65,000 and the other one could cost you almost $500,000. You guys are seriously going
to make my beard turn more gray than it already is if
you don't knock it off. So let me show you what to watch out for, that way, you don't lose more money than you have to and
I can save a few bucks on hair dye for a couple more years.
A Roth IRA is a self-directed
retirement account where you can contribute after
tax dollars to be invested. Since the money going in is taxed, the growth of your investments are not taxed and the money withdrawal from the account are never taxed either, as long as you don't try to pull out some of the money before the age of 59.5. There is no such thing
as a joint Roth IRA. So if you and your spouse
want to contribute to one, then you'll have to do it individually, hence the name Individual
Retirement Account. If you both have enough
earned income separately, then you can each invest up to the $6500 limit for the year. If one of you works and the other doesn't, but you file a joint tax return, then the person working can, of course, contribute to a Roth IRA and
your spouse can contribute to a Spousal Roth IRA as well. Remember, these accounts are
owned by the individual person and on paper, not co-owned by both people.
I want to try to encourage you to max out your Roth IRA every single year, if possible, because if you
don't do it for that year, then in the future you
cannot go back and contribute for a previous year once that time limit has passed. A Roth IRA is one of those accounts where I would bend over backwards to make sure that I can
put in the full amount allowed every single year. In my order of operations for
what to do with your money, I have maxing out a Roth
IRA right after investing up to your employer match and HSA. That is how important
this type of account is. The good news with this
is that you actually have a timeframe of 16
months to contribute for each calendar year. So if we are in 2023
right now, then you have from January 1st, 2023, up until
when taxes need to be filed for that year to contribute,
which in this case, would be April 15th, 2024.
That's how it is every single year, so ignore the actual dates in my example and pay more attention to the timeframes since the date taxes are due
will change by a few days from year to year. Most brokerages will ask
you which year you want to contribute to. For example, I personally
invest using M1 Finance, which you can check out down
in the description below, and also get a deposit bonus as well. If I contributed to my Roth
IRA through them right now, then they would ask if I wanted the money to go towards 2022 or 2023, since at the time of recording this, we haven't hit the date
where taxes are due. This is great because it
gives you some extra time beyond the current year to
contribute Roth IRA money for that year.
Before I tell you the next mistake that I see way too many people making, please help support my dog Molly by hitting that thumbs up
button and sharing this video with anyone you think it would help. Once you deposit money into your Roth IRA, there's one more extremely important step you need to do that I see a ton of people missing, and that is
actually investing the money. I can't tell you how
many people I've talked to over the years who just put money into the account assuming
it would automatically grow, or knowing that they
needed to invest the money, but just forgetting to do
it because life happens, and things naturally slip out of our mind, only to check their account
balance years later, realizing that it hasn't grown in value because they didn't invest the money.
Stop the nonsense here and
just set up auto investing within your investment account, and if you're waiting because you think that you can time the market
to buy in at a lower price, you can't, because it's
nearly impossible to do, so just to get the money
invested right now. If you know how you want to
invest the money, then great. If you don't, then I personally
like the two fund portfolio for people who are in
the accumulation phase of investing and in the
three fund portfolio for when you're closer to
retirement or in retirement.
I'll have a link to a
playlist then I made just for you where I teach you
about both of those portfolios down in the description below
and above my head as well. When you contribute to a Roth IRA, all of your money is not
locked up until 59.5. You can withdraw the
contributions that you've made before that age without paying a penalty, but you cannot withdraw any of
the gains within the account. For example, if you've contributed $6500 and the account has grown to $10,000, then you can withdraw
the $6500 contribution, but you cannot touch the $3500 gain without paying a penalty until 59.5. I've gotta interject for a second to give my personal opinion on this. While withdrawing money
penalty-free is an option, I want to encourage you not to do this. To be brutally honest, I think that doing this
is one of the dumbest, most irresponsible, short-sighted
things that you can do.
Withdrawing just $6500
worth of contributions would cost you $65,000 in
future investment growth. So when any money is
taken out of this account before retirement, think
about how it's actually going to cost you 7,800 Chipotle burritos, or 65 new Apple iPhones, or anything else that you would buy for that amount of money. And yes, I am fully aware
that you can do a penalty-free early withdrawal up to
$10,000 before the age of 59.5 for a first time home purchase. But this is just as stupid as withdrawing your contributions early
because that $10,000 is costing you over $100,000
in future investment growth when you pull that money out. Average annual home appreciation over the past 12 years has been 6.11%, and the US stock market
has returned 12.27%. Leave your money in the freaking Roth IRA and go earn that $10,000 that
you need to buy the home. Responsible investing takes time, like five or 10-plus years, and this money needs time to grow.
The second you withdraw
any of your contributions, you are cutting down that tree before it even has a chance to grow fruit. Once you withdraw
contributions from the past, you cannot replace that
money in the future. I get that emergencies happen in life, so that's why you need
to have money set aside in an emergency fund to
pay for those things. Do not, under 99.999% of circumstances, use your Roth IRA money for anything other than when you retire. One thing I see way too many people doing is investing in a
taxable brokerage account before they have their Roth
IRA maxed out for the year.
This is a huge mistake from a tax savings
perspective for some of you because of how each account is taxed. With a Roth IRA, you invest with money
that's already been taxed, so the money can grow tax-free
and be withdrawn tax-free. With a taxable brokerage
account, you are paying taxes for the ongoing dividend
distributions every single year. Then you have to pay capital gains tax when you go to withdraw the money.
Since the money within
a Roth IRA will grow and can be withdrawn tax-free, realistically, you want
this account to get as large as possible, but not at the expense of
your personal risk tolerance. You should not take on
additional levels of risk by investing in more
risky, unprofitable stocks that random YouTubers have been pumping over the past few years or actively manage funds to
try to achieve higher returns. 99% of people, including
myself, cannot handle investing in something with a
high risk and potential, potential, high return. So don't even bother. The money in this account
is for retirement, so is it really worth it to risk that 60-year-old's financial wellbeing because you decided to gamble with their money right now? I doubt it. Some of you might be over
the income limit to be able to contribute to a Roth IRA, or some of you will be at
that point in the future as your income grows. You can still contribute to a Roth IRA to take advantage of the tax-free growth by doing a backdoor Roth. To simply explain the process,
all you do is contribute to a traditional IRA.
Do not invest the money yet. Then contact your brokerage
to have them convert the money to a Roth IRA. Now, I have done it with M1 Finance before and it was extremely easy. It only took I think two or three days for the money to get into my Roth IRA. Only do this if it makes sense based on your current tax rates
and future financial plans. There's two things that you can do. if you are someone who thinks that you might be over the income limit, but you are not going to 100%
know until the year is over. Number one, you can
either wait until January of the following year,
like we talked about in one of the previous mistakes that
I mentioned, or number two, you can just contribute the
money to a traditional IRA, then do a backdoor Roth within
the year to get the money into the account so it can be invested.
That way, if you are
over the income limit, you've already done the backdoor Roth. If you're under the income limit, no big deal 'cause you had to pay taxes on that money that was going
into the Roth IRA anyways. A question I get a lot is
whether or not you can contribute to a Roth IRA on different brokerages. The simple answer is yes. This is how it would play out. You can contribute up to the max for one year
on, say, M1 Finance.
Then you can decide to contribute up to the max on fidelity the next year. Then you can contribute up to the max on Vanguard the following year. So by the end of that third year, you would have three different Roth IRAs with three different brokerages, and there is no problem with that. You can take it one step further. If you decide, hey, out of these three, I actually like M1 finance
better than the other two, you can convert the
Roth IRAs with Fidelity and Vanguard into your
M1 Finance Roth IRA.
You can also split up your contribution for the same year among
different brokerages. So if for this year you want
to say contribute $4,000 to an M1 Finance Roth IRA and the remaining $2,500
into a Fidelity Roth IRA, then you can do that without any problems. The only thing you
cannot do is try to game the system by saying contributing $6500 into an M1 Finance Roth IRA and $6500 into a Roth IRA with another brokerage. You cannot exceed the maximum
amount allowed per year across all of your Roth IRAs on all of your brokerage accounts. Technically, you could do that since all of the brokerages aren't talking
to each other to keep track of what you are contributing, so you have to self-manage this. I would highly, highly recommend making sure
that you do not do this, whether it's on purpose or on accident. I don't know what the penalty is for this, but all I know is that you do
not want to get caught trying to defraud the government
in any way, shape, or form.
Long-term investing is the name
of the game with a Roth IRA. This money is for when
you are in retirement, so make sure to take that into account when investing this money. No gambling it on stocks
that random YouTubers are promoting. I think the two or three fund portfolio is perfect for your Roth IRA, which you can learn more about
in these videos to your left. There's a bunch of free stocks and resources down in
the description below to help with all of your personal finance and investing needs. I'll see you in the next one, friends, go..
2 Laws for Generating Wealth
Jason 0 Comments Retire Wealthy
Any successful plan to generate and sustain
sufficient wealth must incorporate two very basic rules: 1) Generate Investible Savings. The first step to unlock the path to building
tremendous wealth is not about investing at all. It is about generating Investable assets. For most people this begins by terminating
any expensive debt such as credit card or high interest debt. The reason being that expensive debt increases
one’s expenses and eats into investable resources. Second step for most people is redefining
certain parts of their remaining income as compulsory payments that must be done. That payment is, in fact, the first step of
savings for investing. The third step for most people is to invest
time and entrepreneurial energy to increase their gross income. Getting a better job, a promotion, a new skill
or starting a business that can generate profits disconnected from your immediate personal
labor resources. The fourth step would be establishing some
kind of an emergency fund and getting sufficient insurance to cover yourself against unpredicted
expenses. When the four steps are done, you can start
generating sufficient investable assets that can be put to work growing over a minimal
period of five years.
When this is done, you can proceed to the
next rule. 2) Invest investable savings into exponentially
growing assets, growing for many years while limiting the taxes you pay. Once you generate investable assets and are
ready to put them to work, comes the next tough question: Where should I deploy my investable
assets to maximize my investment and to generate more wealth? You should know that any and all investable
assets you will ever encounter can belong to one or another of these two categories:
Exponentially Growing Assets or Regular Growth Assets.
If you ever hope to generate sufficient wealth
from your investable assets, you must learn how to separate your exponential growing assets
from your regular growth assets and then make sure you are sufficiently exposed to the exponentially
growing asset class. Exponentially growing assets are a rare creature
few understand, even among seasoned investors. There is a set of strict rules to become eligible
for the coveted title: A) At their very core, they must yield very
high returns on internally invested resources and expenses – such as inventory, labor, plant
& factory or R&D; What sets exponentially growing assets apart
from any and all investable assets is their ability to make a large profit on a small
base of required resources. The more expenses and investments one needs
to make a profit, the less profit is left to increase the value of the asset itself. B) They must have sufficiently large market opportunities
ahead of them to enable many years of sales growth displaying high returns on invested
resources; While many possible assets can generate high
rate of return, exponentially growing assets are not a one-off occurrence or limited activity
and must be able to maintain their course of growth over many years to build sufficient
appreciation for their owners.
C) They must provide extensive internal reinvestment
opportunities to use profits at similarly high returns To really become an exponentially growing
asset capable of building imaginary amounts of wealth, the asset must provide managers
the ability to use the rivers of cash generated regularly from the asset in a similar high
rate of return. When these criteria aren’t met, owners soon
realize the resulting rivers of profits do not grow at a high rate and the growth in
wealth soon slows down due to the ever-growing profits invested in lower rate growing assets.
D) They must be led by honest, high integrity,
talented managers, who are actually risking their own wealth alongside their investors. For these executives, a small increase in
the share price will generate much greater wealth than any increase to their paycheck. Executives of public companies have the ability
to loot the company’s coffers or engage in wealth destruction in an infinity of ways. To avoid that, check to see how large your
CEO’s stake in the company stock is before choosing any investment.
As long as the company still embodies the
4 rules that we covered here, you stay invested; this is the one last requirement when investing
in exponentially growing assets. ALL exponentially growing assets see their
stock price cut in half several times during the decades, usually due to different parameters
that don’t reflect the actual company value. Holding these assets through turbulences,
and even adding to them, requires temperament and familiar understanding of the business,
which results in the conviction to stay the course..
Transitioning to Retirement Part 2 (1 to 5 years before retirement)
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
yeah hobbies is a big thing because a lot of people say i don't know what i'm going to do in retirement because i have no hobbies but they'll say i don't play i have no hobbies so you have to you've got five years to start to think about that a lot of people wait till it's too late and there's so much stress on them they have no hobbies they don't know where they want to live they're not talking to their spouse we want to prevent all of that today we're talking about transitioning into retirement and this is part two of our three-part series if you remember and if you watched it the first part is five to ten years out today we're going to focus on your planning and things you need to do one to five years out before you leave your business and enter this third phase you know this is going to be a hard transition in your life if you aren't prepared and if you don't plan when we entered this phase we looked for help we looked everywhere but the only thing we could find was financial planning help and that's not what we needed and that's why we started this company because we realized we were struggling a bit and had to figure out how to pivot to make this time of our life as good as it could be so here we are retirement transformed in part one which was five to ten years out we gave you four strategies to work on the first was planning the second was understanding risks and when we talk about risks in retirement it's things like your loss of identity and creating a new identity your loss of community and creating a new community and those 40 hours of free time that everyone gets back the other thing was building a vision for your retirement five to ten years out you want to start thinking what is it going to look like and you also the fourth thing is start thinking about habits and routines what are some good habits you want to bring forward what are some bad ones you need to stop we want to make sure you go back and watch that episode the link is pasted below in the notes so we're going to build on those strategies today as we look at the one to five years out you know and in this time frame by now one to five years from your retirement date you do need to have a financial planner in place and so you have the financial planner your vision should start being clear and assuming it's your choice to retire you have a time frame and a date you know you have to start getting comfortable with the idea and getting more overall clarity time is going to go by really quickly now you know we both retired a lot earlier than we thought and because of that we weren't prepared you know i was at the peak of my career and i decided to sell my company i was 55 years old and i planned on working another 10.
Everyone wants to work to 65 right but i only worked for five and you know simultaneously my company was sold to a competitor and i stayed during the integration for three full years but i found that it wasn't going to work for me anymore so together in december of 2018 we left together and our entry into retirement was rough you know we we spent a year traveling the globe we went to italy uh florence uh where else are we london london bora bora bora bora was great but we did that we entertained family and friends for a summer that felt like a year we realized we didn't really have a purpose and one day we looked in the mirror and neither of us liked what we saw no we didn't we didn't we didn't we didn't look good and we didn't feel good and the thing is we don't want that for you this transition is hard and the more prepared you are the better chance of success you'll have so here's some additional steps that you should be taking one to five years out before retirement now this comes from our experience our success and our failures but also from many of the clients that we work with you know the first thing we're going to ask you to do and you might roll your eyes is to buy a journal aligned or unlined journal a cheap journal just something to start writing in something you can start documenting your thoughts and we're going to give you a little structure on that but writing is better than electronically typing it start recording your thoughts your feelings your struggles and your successes you know the reason that writing is better than electronic is it forces you to actually slow down you can't get the words out fast enough so you have to actually think of the words and write them and you retain it better when it's electronic even if you're a good typist you can just bang them all out you're not really allowing your brain to slow down and focus so journaling and writing is really important it's funny when you said bang them all out because you're a one finger typer two fingers this one and that one anyway be a place for you to gather your thoughts but more importantly to break up your journal into buckets and i'll tell you one of the buckets can include our five pillars physical wellness mental wellness relationships that you want to deepen or let go of your spouse partner alignment or misalignment wherever it might be and the last bucket is wisdom sharing you want to start thinking about what is it you're going to do after your career ends to get fulfillment to make good use of all of your skills and your experiences to to to serve others in a way like what jody and i are doing with this business and you want to start listening to your voice and writing it down and we're actually going to go deeper on wisdom sharing today because that's for the next five years you really want to start thinking about how that's going to fit into your life so this journal is going to incorporate kind of where you are now and you're going to put some reaching statements in to figure out where you'd like to be and then you're going to be able to do some research and organize your thoughts right and some other areas to put in the journal to start thinking about is travel plans if you want to travel write it down and figure it out and start thinking about it we have the greatest travel agent by the way that helps us figure some things out but you also might want a vacation home right and you also might want to think where do you want to live in the next 30 years right and how's that going to impact or affect or include your children and family how does that where you live how does your location impact your hobbies yeah hobbies is a big thing because a lot of people say i don't know what i'm going to do in retirement because i have no hobbies or they'll say i don't play i have no hobbies so you have to you've got five years to start to think about that a lot of people wait till it's too late and there's so much stress on them they have no hobbies they don't know where they want to live they're not talking to their spouse we want to prevent all of that we also want to give you a place where you can put down some aspirational hobbies yeah maybe learning a language or going to an art studio or picking up a new sport start painting start painting yeah mark's laughing at me because i want to start painting i just haven't had the time four years ago i gave you the whole painting kit the easel and all of the things and they're still in the closet maybe i'll go now okay okay there you go all right second thing to do we're going to focus the rest so the first is the journal that was all the big journals get a journal and start writing right and you know write and then put it away take it back out again put some tabs in there on these different sections i think you'll really enjoy it but let's talk about wisdom sharon because this is really a core component of your retirement transformed and one of the things that we did ourselves and we do with our clients and we share with this in a very deep way in our online course is to figure out some things about yourself so we want you get a blank piece of paper and we want you to put five columns in there going left to right and the first column really is to list all of the jobs and the roles you've played over your entire career or your life in the last 30 or 40 years and sometimes it's easy to break it into buckets the last 10 the previous 10 whatever it might be sales role ceo and you want to go back as far as you're comfortable with i know for me i went back 20 years i know for mark he went back to his first job out of middle school which was cutting lawns paper boi oh paper boi paper boi when did you cut lawns after that because you went all the way back i wasn't allowed to use lawnmower it was too little so you pick the time frame that works for you but in that first column you want to list all those jobs that you had and then put the date because the date the second column the date just so you kind of have a reference but really where it gets interesting is the third column we want you to write down what did you love about that job what what excited you about it why did you like it so much what emotion comes to mind when you think about being a paper boy or cutting lawns or right i happen to be the world's greatest waitress which helps me helps me be a good mom of six kids carrying plates the fourth column is perhaps what did you dislike about that role because if you didn't like it you clearly do not want to take up that type of job right or that that service in your retirement if you don't like it and then the fifth column is what has this job or role taught you and then to sum it up you want to go through those sheets and do a whole bunch of them pick your top five it's critical it's all we want you to do is what were the top five jobs or roles that you played in the last 30 years so that's probably a pretty big and a pretty busy sheet for most people the second thing we want you to do is list your strengths and values as they speak to you go through and list them and get a top five for each strength or value and once you have that combine that with your top five jobs and see where you land and start writing about it you're gonna start getting a little clarity on what it is you think you might want to do the other thing to do as you're writing and thinking about it you've got you know one to five years left of work start paying attention to your to your days now so you went backwards now going forward if you have identified sales leadership as something you like really pay attention when you're doing it now you know if you're a finance person and you love working on spreadsheets is that really what you see yourself doing after so it's really important it makes makes me think of that what was that book that uh we read um wisdom at work by chip conley yeah we'll put those notes down below wisdom at work by chip conley the making of a modern elder an awesome read it's a really interesting book about his role in airbnb and the other thing to do during this phase if you're not already is start volunteering in any way shape or form you know it could be at the food bank it could be anything but you want to find a way to volunteer board service well i'll tell you it makes it easier to find your volunteering niche after you've gone back and you've looked at what inspires you in different roles and what your core values and competencies and where you get your juice from and then you figure out how much time you have now with the one to five years still working and then you figure out how to launch into a volunteering role and every community needs you now look these next five years are going to be a challenging time they're going to go fast we don't want you just to coast and all of a sudden end up thinking oh my god i'm leaving in 12 months the next video is about the last 12 months but we want you to do everything we talked about in the first video and this one to get you ready for that and that way you'll land in this phase fully prepared and listen if you enjoyed this please share with your friends and also please subscribe by clicking the subscribe button below and don't forget to join our free facebook community the link is in the notes as well it's a great place to start to build a community for your retirement phase thanks so much for listening and we look forward to being with you again soon you
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Retirement Planning in Your 50s and Beyond
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
Your 50s are an excellent time to get serious
about retirement planning, and that's because at this point in your life, you may have figured
a couple of things out. You might have a decent idea of where you
spend money, what your preferences are, the things you don't care for so much, and you
might also have some financial advantages at this point in life. Perhaps you've paid off a lot of debt maybe. If you had kids, they're out of the house
or almost independent. And you might be in your peak earnings years
because you have gained some expertise and some knowledge in whatever it is you do for
a living, and one big reason to get serious is you might have more money than you've ever
had before saved up so now it really counts. A 10 % loss in the markets, for example, hurts
a lot more than it did when you were 22 years old.
But whether you're just getting started saving
for retirement or you've been doing it for decades there are some important things that
come up in your 50s that can help you pave the way to a smoother retirement down the
road. The first thing to watch for is catch-up contributions,
and this is not the condiment, this is a catch-up contribution that allows you to put extra
into your retirement accounts each year once you reach age 50. The IRS sets maximum limits on how much you
can contribute to those accounts, but at 50, you can do a little bit extra and that helps
to boost what goes into those accounts each year for example in your 401k or 403 b or
governmental 457 you can put in an extra six thousand six hundred dollars per year as a
catch-up contribution on top of the max that you had back when you were 49 years old and
your knees didn't hurt as much.
For traditional and Roth IRAs, for 2022 that
number is a thousand dollars of extra catch-up contributions. Of course, this is assuming that you have
the cash flow to make the maximum contribution and put the catch-up contribution on top of
that, and if you don't, that's okay, it's not feasible for everybody, just do what you
can. But if you are really trying to maximize your
account balances at retirement, those catch ups are a powerful tool. The next thing to do is to look at your Social
Security and pension benefits. It's a good time to start getting a realistic
expectation of what you might get, and that's because you might assume that you're going
to get a lot more or a lot less, but it's really helpful to start figuring out how those
systems work and how much you can expect each month.
If you're eligible for Social Security, you'll
want to go through your earnings history and make sure that that is accurate because if
any years are missing you may end up with a smaller monthly retirement benefit. Your benefit is based on your 35 highest earnings
years, so you want to make sure that those good earning years are in there and that you
don't have any unnecessary zeros in your history. Keep in mind that you may be able to get some
retirement benefits from a former spouse or your current spouse, so if you're widowed
or divorced, for example, you want to research those potential benefits and you might also
be able to get income on your spouse's earnings record if you are still married and there,
are some strategies you'll want to look at as you go through that process.
By the way, I'm Justin Pritchard, and i help
people plan for retirement and invest for the future. So, there will be some resources down in the
description below that cover this in more detail and give you some other pointers. Another smart move is to manage your debts
or make a strategy for them. So, if you have consumer debts like credit
cards for example, you definitely want to plan to eliminate those debts and make sure
that your spending stays within your income limits so that you're not digging yourself
a hole during retirement or as you head towards retirement. But what about so-called "good debts" in retirement? For example, a mortgage.
There's a lot of benefit to being debt-free
and not having a mortgage payment when you're in retirement a lot of people really focus
on getting rid of that loan before their retirement date but it's not necessarily the end of the
world to have a mortgage in retirement, and paying it off quickly out of your retirement
funds can cause some problems. As long as you can fit that monthly payment
into your income maybe that's your Social Security, pensions, and some withdrawals from
savings accounts, and you can manage that debt comfortably, then again, it's not the
end of the world, and remember that that loan payment will eventually go away someday which
frees up cash flow for other expenses maybe health care expenses later in life. Speaking of expenses, how much are you going
to need to spend? Well, that's something to start figuring out
and there are a couple of different ways to do that this video that's going to pop up
above will give you some pointers on that but basically you can look at your spending
today and maybe adjust that for inflation or you might look at an income replacement
ratio and say maybe I just need 80 percent of what I'm earning now that might or might
not be right for you or you can target a certain level of spending such as $50 or $100,000
whatever the case may be, and with those numbers you can set a goal to start heading for once
you have an idea of your spending and your retirement income sources and your assets
then you can run some calculations and again we're setting your expectations so that you
know if you're on track or not and this can alert you to some potential shortfalls or
maybe let you know if you could retire earlier than maybe you expected there are a lot of
helpful online calculators out there they can do a decent job of getting you in the
ballpark but make sure you understand what their limitations might be so they don't necessarily
get super detailed and you might not be able to adjust all of the assumptions but again
you can get some basic ideas of if you're sort of close or if you're way off on what
you expected another good move in your 50s is to refine your investment strategy so up
to this point you may have been doing some great things to get you to the point where
you are you've built up some nice assets but if you've been using high risk strategies
maybe speculating maybe day trading that sort of thing it's time to ask yourself if that's
something that you want to continue doing at this stage in life it is difficult to consistently
get good results with those high risk approaches and you might have more to lose now than you
did previously.
I'm not saying you can't do it or definitely
don't do it but I would say proceed with extreme caution and maybe just say hey I've done a
good job up to this point maybe I'll reevaluate what I'm going to do going forward. At 50 it's time to start thinking about long-term
care if you haven't already been thinking about it there's a 70 percent chance that
you might need some type of long-term care and that might include everything from somebody
helping you out at home maybe this is a loved one assuming you have somebody at home who
is willing and able and remember it could be physically and emotionally difficult and
it might require expertise but it could include somebody helping you out at home who you know
or you going into a skilled nursing facility and paying those higher costs that are associated
with that higher level of care there are several ways to deal with the costs and that might
include a long-term care insurance policy but those are kind of problematic so definitely
look into them but consider some other alternatives as well maybe instead of maybe to supplement
or maybe you just go with insurance but some other options include saving up assets and
earmarking those for a long-term care event or maybe looking at your home equity as a
safety net to cover some of those big expenses that's not necessarily a fun way to spend
your time so one of the other things you can do is envision how you want your retirement
to unfold and this is a really important step that a lot of people skip it's important to
have something to do with yourself once you stop working you might have gotten a lot of
your social engagement a lot of your meaning and some of your identity out of your work
and you might want to not necessarily admit that but for a lot of people that's the case
it's easy to say that the main thing you're looking forward to in retirement is not going
to work but you probably want to have some ideas on how you're going to fill your time
and that way you're going to number one enjoy it more and number two there might be some
real benefits in terms of your mental and physical health if you are retiring to something
as opposed to just retiring from work, so ask yourself how will you fill your days? What are you most excited about and interested
in? What can you do to find some meaning and some
purpose during that time? And who might you spend time with, and what
are your plans for keeping your physical health as good as you can possibly keep it? 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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