How Much Money You Need to Retire [Explained]
A step-by-step guide on how to calculate the amount of money you need to retire. At the end, I share my favorite retirement formula that made me quit my job to travel the country in an RV for 2 years.
What's in this video?
This video walks through how to calculate your retirement numbers. There are four main components to figuring out how much you need to retire:
1. How much will you spend in retirement. Retirement isn't about your current income, but rather what you plan on spending when you retire. This includes figure out your annual, or monthly spending to come up with a "retirement budget", which you will base your savings goals on.
2. What types of investments do you need? Studies show that a 50% stock index fund, 50% bond index fund portfolio will yield 8% average returns, allowing you to keep your portfolio "safe" in retirement. A recent update that shows more success is a 60% stock index fund, 40% bond index fund portfolio may perform better in retirement.
3. How much can you withdrawal per year? Per month? This is based on the Trinity Study and Bill Bengen's SafeMAX withdrawal rate of 4%, also known as the 4% rule. This states you can withdrawal 4% of your total portfolio (per year) and never run out of money in a 30-year retirement.
4. How much you need to invest (by age). I put together a table of how much you need to invest starting at any age to reach your retirement goals.
BONUS: Coast FI changed my life. Understanding that I already had enough invested to retire at a traditional retirement age allowed me to take the risk of quitting my job and traveling he country in an RV for 2 years.
Resources:
Free Budget Template: https://www.roadmapmoney.com/go/signup
M1 Finance Roth IRA Video: • M1 Finance Roth IRA Tutorial (Tax Fre...
M1 Finance (affiliate link): https://www.roadmapmoney.com/m1
Compound Interest Calculator: https://www.investor.gov/financial-to...
Research:
Vanguard Asset Allocation Historical Returns: https://investor.vanguard.com/investi...
Bill Bengen SafeMAX: https://www.retailinvestor.org/pdf/Be...
Trinity Study: https://www.researchgate.net/publicat...
Michael Kitces 4% Rule: https://www.kitces.com/blog/how-has-t...
Other stuff:
I am not your financial advisor, and the contents of this video are for educational and entertainment purposes only. Please do your own research before making any investing decisions (DYOR). The video is accurate as of the posting date but may not be accurate in the future.
00:00 Intro
00:39 Common Retirement Formulas
02:56 Your Retirement Spending
05:35 The 4% Rule
10:00 The Retirement Formula
13:00 How Much to Invest
19:37 Coast FI Formula
22:50 Like, Subscribe, Notifications
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The website: https://www.RoadmapMoney.com/
More About Me: https://www.RoadmapMoney.com/about/
Our Story (Quit 6-Figure Job To Travel Full Time): https://www.RoadmapMoney.com/i-quit-m...
What is Roadmap Money?
I’m Jacob Wade, the Founder of Roadmap Money! I am a husband, father, and former full-time RVer!
RoadmapMoney.com was created out a passion for helping you create a PLAN for your money and helping you keep more of it.
By budgeting and investing wisely, we have:
Lived on $14 an hour and STILL saved money
Enabled my wife to be a Stay At Home Mom
Paid off over $40,000 in debt
Grown our net worth from negative to over 6 figures
Quit my six-figure job and travel the country for over two years!
Subscribe to this channel to follow along!
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