George Kamel - How to Make $100,000/Year in Retirement

Starting point is 00:00:05 Go with me here. It's the Year of Our Lord 2060. Justin Bieber is president. Your kids are taking their college spring break trips in virtual reality. You finally bought into the whole pixelated clothing trend. We're all forced to use Android devices. Just kidding, what cruel hell would that be? And us millennials are still reminiscing about VHS tapes as we reach retirement age. Now this is a video store. Wow. Wow. Wow. We're thinking about what we want from the sunset years of life. Not to mention what our retirement income will afford us. You see, when it comes to retirement savings, a lot of people have a specific dollar amount in mind, like one or two million. But you also need to think about your retirement income or the amount you can withdraw to live on each year of retirement to make sure it can support the lifestyle you want for as long as you need. So because I want you to have a ball of retirement and because whole numbers are easier to do math with, I'm going to show you how much you'll need to save to have a yearly income of $100,000 in retirement.

Starting point is 00:01:02 But first, a quick message from George of the Future, year 2060. Good people of YouTube, the future is awesome, especially the gluten-free hamburger buns. But getting us here is up to you. So do your part by hitting those like and subscribe buttons. Your grandchildren's inheritance depends on it almost as much as future Pete Davidson depends on depends in 2016. Ha ha ha ha, jk bro, you've been cryogenically frozen for years now. A recent survey from Charles Schwab asked 1,000 Americans with 401K plans how much they think they need to have saved for retirement.

Starting point is 00:01:36 Their answer was $1.8 million. But how do you know what your retirement goal number should be to afford a six-figure retirement income? Do you just shoot for the stars and hope you hit a trust fund? Bro, what are you talking about, man? Well, there's actually a simple way to figure out how much you'll need to save. But quick caveat, not everyone is going to need a six-figure retirement income. We chose $100,000 because the median household income in America is about $75K. And we figured $100k a year would be enough to keep up with inflation, health care costs,

Starting point is 00:02:06 and maintain that boozy lifestyle. Hey, those anti-aging asa-e bowls ain't going to pay for themselves. Wow. Wow. Wow. So now that we're all clear on that, let's figure out how much you'll need to have in your nest egg

Starting point is 00:02:16 to pull $100,000 a year in retirement. First, you've got to consider your withdrawal rate, aka what percentage of your money you plan to take out of your nest egg every year. In the financial world, there are all kinds of opinions about what a proper safe withdrawal rate is, but it all depends on the size of your nest egg, your risk tolerance, your investments, your age, lifestyle, and what kind of golf cart you want to drive in Del Boca Vista.

Starting point is 00:02:39 Are you telling me there's not one condo available in all of Del Boca Vista? That's right. Most financial advisors recommend a withdrawal rate of 4% to make sure you don't run out of money. Now, they're being uber conservative here, like even more conservative than bringing a green bean casserole to a Lutheran potluck. But think about this. The S&P 500 has had an average annual return of 10 to 12%. That means even with 4% inflation, you could technically withdraw 8% and not

Starting point is 00:03:06 touch the principal balance. That's pretty amazing. But to avoid the wrath of the keyboard warriors in the comment section, let's just go uber conservative just to make a point. So if we want a hundred thousand dollar salary, that's got to be four percent of your total nest egg. So to get to that target nest egg number, you multiply 100,000 by 25, which equals 2.5 million dollars. One million dollars. But how do we get an amount of money equivalent to the cost of 1,000 French bulldogs? And how much do we need to save every month, to get there. Well, the answer depends on how much money you're starting with and how much time you have left to save until retirement. Well, you can say that about most anything. It depends.

Starting point is 00:03:43 Of course, it depends. So to be Uber conservative again, let's say you're starting from zero with no retirement savings and you want to retire at 67 with a thousand French bulldogs. I mean, $2.5 million. Just me? Just me? Am I the only one with that life goal? Can you imagine a farm with just a thousand French bulldogs living their best life? Baby. For these examples, let's assume a 10,000, a 10% average annual rate of return. And if you think that's insane, let me introduce you to my good friends, history and data. Historically, the S&P 500 has had an annual return of around 10 to 12%.

Starting point is 00:04:17 So to get to that $2.5 million number by 67, here's how much you need to save every month. If you're 20 years old, you need to save $196 a month. If you're 30, you'd need to save $537 a month. If you're 40, you'd need to save $1,520 a month. And if you're 50, you'd need to save $4,000. $5,697 a month. So clearly, the sooner you start, the easier it's going to be. But if you're older and feeling behind, remember, there's always money in the banana stand. Always money in the banana stand. Side note, to find the number for your exact age and goals, we've got a retirement calculator you can play around with. I will link that below and I encourage you to check it out. Let's change the subject. Let's talk about a way you could save money on your phone plan. And that's by switching to Tello, one of the sponsors of today's video. Tello is a mobile service provider offering the same high-speed nationwide coverage. you thought you could only get from the big guys. At prices lower than the height requirement to ride a log flume with six flags.

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Starting point is 00:05:25 their unlimited data plan for your first month of service. That's tello.com slash George or click the link in the description. Today's video is also sponsored by Delete Me. You know those weird, shady sites that sell your personal info for a profit? Well, Delete Me is out there to be the hero

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Starting point is 00:05:59 by going to join DeleteMe.com slash George or click the link in the description below. Now, for those of you who always, or advanced in age with a few gray hairs and a favorite podiatrist. If these numbers scare you as much as your discolored bunyan, remember, this is what you would need to retire with $2.5 million and $100,000 annual income. But you can totally retire with less. I mean, you don't need $100,000 a year to live.

Starting point is 00:06:22 Just run the numbers and come up with a goal that's right for you. Plus, if you're following the Ramsey plan like I am, you won't have a mortgage and you won't have debt payments when you retire, which plays a big role in your retirement income and expenses. And while tax rates may go up over time, if you've prioritized investing in Roth accounts, like I always say to do, you won't have to worry as much about that, because you can withdraw that money tax-free. You already paid the piper, which in this case is the IRS,

Starting point is 00:06:47 not the actual Pied Piper from the fairy tale. That guy drowned rats and stole kids. Grim stuff. Oh yeah, and Social Security is probably going to be adding to your income as well. But don't rely on that because who knows what's going to happen with it. Just think of that as icing on the cake if you do get it. Hey, maybe you can use that money to buy. buy some hard candy to pass out to the kids at church.

Starting point is 00:07:08 Now, for those of you who are young enough to know the cry-loughing emoji is chugie, number one, respect your elders. And number two, take note of how much time makes a difference in this equation. It's huge. So start investing as soon as you're financially ready, which is when you're debt-free with three to six months of expenses save for emergencies. And one more thing. Let's take another look at that graphic from earlier.

Starting point is 00:07:27 Nope, not that graphic. Although it is true. Different graphic. Okay, let's take a look at this graphic. If you're 20, you'd need to save 190. $96 each month to reach $2.5 million by 67. But that doesn't mean that's how much you should be saving. No matter what age you are, I recommend investing 15% of your income into retirement.

Starting point is 00:07:48 Then once your house is paid off, you can start dumping even more money into those accounts until you hit your yearly legal max. So if you're 30 and make the average salary of $56,000 a year, that's $700 you'd be putting into your 401k every month. Even if you never got a raise and never increased your monthly contributions, you'd still hit that $2.5 million mark by age 65. That's amazing. But why stop there? If you keep going until you're 67, just two more years, you'd retire with just over $3.2 million. That's a $700,000 increase in just two years thanks to compound growth. So the lesson here is that when you invest

Starting point is 00:08:23 early and consistently, that compound interest can make miracles happen. Well, at least financial miracles. There's nothing that can save Quiznos fall from grace now, so don't get your hopes up. Now, if you're just getting started and you're feeling behind, don't freak out. You may need to save more each month and take advantage of catch-up contributions, but you still have some time to get that account balance up and retire with dignity. Just head over to our investment calculator and plug in your own numbers to see how much you'd need to save to reach your ideal retirement income. Again, I will link that below.

Starting point is 00:08:53 Listen, to build any kind of wealth, you need a long-term mindset. Discipline, simplicity, consistency, and time is what it's all about. Not investment theories are too good to be true strategies or even huge incomes. Just start investing, don't stop, and let confidence. compound interest do its thing. P.S., if you want a deeper dive on investing, I cover the traps to avoid and the right steps to take in my new book, Breaking Free from Broke. There's a lot here to be excited about.

Starting point is 00:09:18 I think this could be very positive for our society and economy. Don't forget to like this video, subscribe to this channel, and please share this with every Gen Zier you know who still has literally decades to invest in their retirement. Seriously, it could make them a multi-millionaire. And share it with your favorite podiatrist. They love a good bunyan joke. Thanks for watching. We'll see you next time.

Starting point is 00:09:37 I stand corrected, said the man in the orthopedic shoes. Podiatrist humor. You wouldn't get it.

George Kamel - How to Make $100,000/Year in Retirement

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