George Kamel - Why Most People Don’t Retire A Millionaire (And What To Do About It)

Starting point is 00:00:05 Are you hoping to retire with at least a million dollars? Of course! A lot of people do. But the vast majority of Americans never hit that million dollar mark. We're going to talk about why in today's video, and more importantly, I'll break down exactly what you can do to retire with more than a million dollars. But before we jump in, hit those like and subscribe buttons so I can get to more than a million subscribers. We're close, right?

Starting point is 00:00:26 No. No. No, halfway there? No, not it. Okay. Cool, cool, cool. Hit that subscribe button. Throw me a freaking bone here. According to the Fed, only around 3% of U.S. adults have a million dollars saved for retirement.

Starting point is 00:00:39 And that's about as depressing as realizing you're now the age where you can injure your back while sleeping. But honestly, I'm not that surprised. Research done by Ramsey's Solutions found that 48% of Americans have less than $10,000 saved for retirement. That's almost half. That'll give me-ma a solid three months at Del Boca Vista if she's lucky. And if she doesn't lose it all in a poker game at the Seminole Cocanac Coconut Creek, if you know, you know what happens at the creek stays at the creek. It ain't nobody else's business.

Starting point is 00:01:06 And according to the Fed, 26% of non-retired Americans have $0 in any kind of retirement account. That's just sad. And I don't want you to become part of that sad stat. But before we talk about how to beat the stats and retire in style, let's talk about why people don't have more money saved. I mean, we all know retirement is coming, right? It's like Christmas, December 25th, every single year.

Starting point is 00:01:25 It might be tempting to blame low wages and inflation for this. And I get it. When money's tight, you have less financial breathing room for things like investing. But here's the deal. You don't need a huge salary to satisfy. back away some savings in your company 401k or an IRA. In fact, when Ramsey conducted the largest study of net worth millionaires, we found that one of the top three careers of those millionaires was teaching.

Starting point is 00:01:44 That's right. Teachers, people, not exactly a profession known for high salaries, although I would love for that to change. Yes, having a large income would certainly help you save for retirement, but we all know it's more about what you do with the income you have versus the income itself. And your priorities and your lifestyle choices are going to play a huge part in this equation. Don't tell me you don't have enough money to save for retirement

Starting point is 00:02:03 if you're making monthly payments on a new truck and eating at Olive Garden thrice a week. Which I think we all agree, too much, twice, maximum. That's not enough. You probably do have enough to save for retirement. You just don't care enough about it to give up your Super Duty F-450 and unlimited soups salad and breadsticks.

Starting point is 00:02:19 If you ask me, the most common reason people have a small nest egg is simply a lack of intentionality with money. If you start investing early and consistently, there's no reason you shouldn't retire millionaire. And before the comment section explodes with people saying, George, one million is nowhere near enough. Let's talk about how much you'll actually need to retire, because it might be more than a million.

Starting point is 00:02:37 Now, in reality, there's not a one-size-fits-all answer to this, because how much you need depends on how you want to live in retirement and what your actual expenses will be. But the trick is this. You want a nest egg that's large enough that you can live off the growth that creates each year without dwindling down the principle before you hit the old dusty trail. Coincidentally, the old dusty trail, one of the best retirement communities of 2024, according to Florida for Boomers.com. And while I made up that stat, that website is very real. Too real, some would say. So let's walk through an example of this nest egg situation. If you have a million dollars in an IRA that averages a 10% annual rate of return, that means you would average $100,000 in investment growth each year.

Starting point is 00:03:16 Now, keep in mind, that's an average. Don't yell at me. Hey, indoor voices. It could be more some years and it could be less or even negative some years, which would mean you'd have to cut spending on certain years or use savings reserves to avoid dipping into that nest egg. But the overall question is, can you live off somewhere around $100,000 a year in retirement? Well, that's a question only you can answer.

Starting point is 00:03:38 And don't just guess. Make sure you have a good idea of what your expenses will be in retirement before you step away from the old 9 to 5. Because the worst place to run out of money is in retirement. The second worst place? The clearance section at home goods. You don't want to miss out on that frame print of a Highland cow in a bathtub. That's a once-in-a-generation print. Okay, so how much do you need to invest each month to retire a millionaire?

Starting point is 00:04:01 I'm going to break it down for you by age, but first, let's talk about a way you might be able to free up some more cash to help you save for retirement, and that's by switching to Tello, a sponsor of today's episode. Tello's phone plans are super affordable and super flexible. There's no contracts, no fees, and no strings attached. It's easy to sign up from the comfort of your own home, and you can even keep your phone and phone number, because nobody wants to receive that new phone who diss text, although I kind of miss getting those. Tello's got plans anywhere from $5 a month to $25 a month for the Unlimited Everything plan, and your free. to upgrade or downgrade as you please. Go to tello.com slash george and you'll get an extra five bucks off the unlimited data plan for your first month of service or use the link in the description below. And while we're saving money, let's talk about where you're keeping your savings. If you're stashing cash for a used car, a down payment on a house, or maybe a few hundred bedazzled

Starting point is 00:04:49 throw pillows from home goods, your money should be working for you. And for that, I recommend a high yield savings account like the one offered by online bank Laurel Road, another sponsor of today's video. Right now, your account balance will earn top-tier APY instead of the measly 0.01% you'd get in a regular savings account. Plus, there's no minimum balance required to open an account. Your deposits are FDIC insured, and there's no hidden fees. You can learn more by going to Laurel Road.com slash George, or just click the link in the description below. Okay, back to our question. How much do you need to invest each month in order to retire a millionaire? Well, to figure it out, I'm going to use the old handy-dandy Ramsey investment calculator to crunch the numbers. And if you

Starting point is 00:05:27 want to do this for yourself, I strongly implore you to use the link in the description so I can send you there, and you can follow along with your own numbers. So how much you'll need to invest each month depends on how much time you have before you retire. Let's use a 24-year-old as our first example. Let's say they're starting out with their first big-boy job with an average salary of 60 grand. But here's the deal. They never get a raise after that. From 24, page 62, they make $60,000 exactly. And we're going to use an 11% rate of return. Here's the deal. Some years might be less, some years might be more, but on average, over the course of that investing journey, it was an 11% average annual return. Here's the deal. You need to invest $150 each month in order to hit that million dollar mark.

Starting point is 00:06:07 As you can see here, the contributions were $68,400. That's how much that 24-year-old actually put in, from 24 to 62. The growth was $964,000. 93% of that account balance was pure compound growth working for that person instead of contributions. Amazing. But listen, we're not all young bucks anymore, so let's do the math as a 35-year-old. So, 35 years old, let's say you're going to work until you're 65, right? You've got to late start. That's okay. From 35 to age 65, and we're going to invest $375 bucks.

Starting point is 00:06:44 Bada-bing, pot-a-boom, just over a million dollars at $65, investing $375. Now, let's say your income at this point at 35 years old is 80 grand. Let's go back to the principle of investing 15%. Well, that's $1,000 a month instead of a measly $375. Where would that get us over the same 30-year range? $375 up to $1,000, $2.8 million. I think I can deal with that. That's a decent retirement if you're a normal person.

Starting point is 00:07:11 Now let's say you're 45 and you start with nothing saved. This is going to be a lot more difficult because we have less time for compound growth to work its magic. So from 45 to 65, we start from nothing. how much will we need to invest monthly to get there? Let's see if $1,200 does the trick. Look at that, just over a million at 65 for 20 years of investing. And again, you'll see, you had to contribute more. $288,000 was the money you put in,

Starting point is 00:07:39 but you still had 750 grand of compound growth that was magic money working on your behalf. So even if you're getting a late start, when you do the right things with your money, you can still retire a millionaire. And if you're over 45 and just getting started investing, don't freak out. Obviously, you'll need to invest more each month to get there or you'll need to work longer than you would have liked. But you still have some time to get that account balance up and retire with dignity, especially if you take advantage of catch-up contributions you can make when you're 50-year-old.

Starting point is 00:08:06 Thanks, IRS. You're welcome. Now, I know some of you are thinking, George, this is great, but where am I going to get an extra $300, $500, or $1,000 to start investing? And to that I say, look at your debt. What's your car payment every month? What's that student loan payment? How about that credit card bill? If you're throwing money at consumer debt every month, there's your answer.

Starting point is 00:08:25 You have the money. Add up what you're sending to lenders every month, and instead, imagine that same amount of money going to your investment account instead. Pay that junk off as soon as possible so you can free up more money for investing. That's the answer. And if you're not doing a monthly budget, go download the every dollar app right now and make one. When you download this app, you're going to see where all of your money's going. You're going to look at all of your monthly expenses and see where you can make changes to free up some cash for investing.

Starting point is 00:08:48 If you want to check it out, I'm going to drop a link in the description below, or you can go to every dollar.com slash George. Now remember, this is all about intentionality. That's what budgeting is. It's just being intentional with your money. So even though most people don't retire with a million dollars, you don't have to be on the wrong side of that stat. If you do the right things with your money

Starting point is 00:09:05 and get started as soon as possible, you can retire a millionaire or even a multimillionaire. Remember, retirement is not an age. It's a financial number. You don't just get to retire at 65 because you worked hard. You've got to get your money working hard for you. And if you want to see how I built a million dollar net worth by the age of 32, check out this video, or click the link in the description below.

Starting point is 00:09:26 Thanks for watching. We'll see you next time.

George Kamel - Why Most People Don’t Retire A Millionaire (And What To Do About It)

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