In this enlightening episode, Tony and Luke reflect on a CNBC article, they explore the inflation-adjusted trajectory from $1 million in 2020 to $1.5 million in recent times, analyzing what this means for different age groups and acknowledging the rising costs due to inflation. They also discuss the traditional rule of thumb for retirement withdrawals and the impact of lifestyle choices on retirement savings, emphasizing the crucial role of a personalized financial plan.
1. Shifting Retirement Savings Goals: Throughout the episode, Tony and Luke address the evolving perception of what it takes to retire comfortably. The hosts discuss a CNBC article highlighting how the retirement savings goal for many Americans has jumped from $1 million in 2020 to $1.5 million in a few short years. This illustrates not just changes in the financial landscape but also the importance of staying updated with economic trends and inflation when planning for retirement.
2. Generational Wealth Needs: The hosts explore how retirement needs can differ significantly across generations. Luke brings up an essential point about younger individuals, such as those in their 20s and 30s, who may need to plan for a much larger nest egg, potentially in the vicinity of $2.5 to $3.5 million, due to inflation, changes in Social Security, and longer life expectancies.
3. The Importance of a Customized Financial Plan: Tony emphasizes the particularity of retirement savings, noting that generic benchmarks might not apply to everyone. Both hosts agree that individual financial planning is critical, accounting for one's lifestyle, expenses, and income. They further stress this point by mentioning how some can retire comfortably on lesser amounts, while others with substantial wealth may still find it challenging due to their spending habits.
4. Investment Considerations in Retirement: Navigating the investment waters becomes more crucial as one nears retirement age. Tony digs into the numbers, explaining how various portfolios, especially the traditional 60/40 stock/bond split, can behave differently in varying market conditions. This section of the podcast underscores the significance of investment strategies and how they must be tailored to individual risk profiles and retirement timelines.
5. Life Planning and Goal Setting: Luke references Napoleon Hill's philosophy, asserting the power of having a concrete financial goal. He suggests that knowing one's desired retirement lifestyle and foreseeing potential expenses can enable individuals to create a clear, achievable path towards retirement. By setting a financial goal, one can strategically navigate towards success, rather than leaving retirement to chance.
In conclusion, Tony and Luke's conversation in this episode of Capitalist Investor goes beyond mere figures, addressing the psychological and strategic aspects of retirement planning. Their insights highlight the necessity for personalized advice and suggest that retirement requires proactive planning and the establishment of clear, realistic goals.
Welcome to this new episode of the Capitalist Investor. As I mentioned before, our new theme here, I'll bring it up one more time, is that we're gonna do more episodes, but shorter, so that you can get your financial knowledge and move on with your day. So with me today, I got Luke, we got Derek's on assignment, and we're gonna chat about today. You just sounded so depressed. Like when you said. You said, I got Luke. You got womp womp. Dang, Luke. It's all right. It's not ok. We got Tony Zadigala. We need to restart the show. All right. I'm excited. Are you? I mean, hit me with my own. What are. What are we gonna talk about today? So I actually saw an article that. I think it was from CNBC, and they said Americans think they need one and a half million dollars to retire today. All right? So my mind just went in so many directions with that because so, as you read the article, back in 2020, people thought they needed a million dollars to retire. And then last year, they needed 1.25 million, and now they need one and a half million. What the heck? The reason. The reason I laugh, the only reason I, like, made hat noise, is because I'm looking at my generation like, I get it. If you ask a 55 year old, that number probably is, like, one and a half or 50 year old. The price, one and a half million. But if you ask, like, a 25, 30, or 35 year old, I think most people know that even one and a half million is not enough, probably, for us to retire on in 30 years down. Not us. No. Well, you're a boomer. You're fine. I'm joking. I'm joking. But, like, someone like me, like, I'm thinking to retire, and I'm not even saying live an excessive lifestyle, like, a very modest lifestyle, you're probably gonna need two and a half to three and a half million dollars my generation is gonna need, by the time they retire, to live just a very modest life. Yeah. And then. And as I read through this article and then googled something else and googled something like. And started kind of, like, prying a wedge in this thing, and then, you know, then they have all these other metrics of, like, hey, if you're 35 years old, you need at least three times your salary saved by this point in your life. And when you're 45, you need, like, six times. And, like, I'm like, jesus, dude. Like, okay, maybe. I mean, maybe those are good metrics, but here's. Here's where this is where the disconnect started with me. I mean, we're talking about a 50% increase in that amount of time. So what the heck happened to the people in 2020 when they retired with 1 million? Like, hey, I hit my barrier, I'm pulling cord. Their accounts should be up 50%. I did do that math. So let's take a look at this. So I dove into some numbers. If you use the old rule of thumb where it's like, you shouldn't be taking more than 4% distributions per year from your retirement accounts, when you retire, 4% of $1.5 million is 60 grand. Then you start tying in probably like Social Security, and now you're making maybe household, if you're married or whatever, maybe 40 grand from Social Security. If you're single, maybe it's maybe two thirds of that number. But now you got 60 grand coming from your portfolio, and then you got 40. So to retire, you need 100 grand. But that also just hits in the same component. One thing you just hit on with. Why my comment earlier, if you're 30 years old, you probably can maybe not plan on Social Security. No, you're right. So if you're now taking out 300, 400, $500,000 of income over 20 years in retirement from Social Security, now you need that to make up in your portfolio. Yeah. And you know what? You brought up something. So I did this other math. So, all right, somebody retired in 2020 with a million bucks. I went and checked tape, and the S and P is up 50% in that time. But no pre retiree that, you know, is all investment should be in stock. So then you start taking a look at the AG, you know, the aggregate bond index, it's down 10% in that time frame. My numbers are fire off top of my head, man. And I mean, I knew it was down. I didn't know how much. And maybe when you dial in the yield and stuff, maybe it's flat, but let's just go. I went with the 10%. If we take a 60 40 portfolio, I'm going to guess accounts are between 1.2 and 1.3, you know, based on maybe distributions that if they did retire, so it's still below the one and a half. The problem here is that I'm. Are people that people are. I think inflation is catching up to people because they know everything is more expensive. And that's, that there's, there's, that is the. Gotta be the only reason. Be like, oh, four years ago I needed a million dollars. Today I need one. And a half. I'm just going to say the same thing I tell almost everyone I meet with, and it's the concept of retirement planning. Financial planning, one of the biggest and most important metrics is just your lifestyle, how much you spend. And I've seen clients that have half a million dollars to retire the most comfortable, and I see clients that have $10 million that will never be able to retire because they spend way too much money. So it's just like, that's where it doesn't really even matter about the amounts. Yeah, we can say you need a million and a half. Yeah, you need 2 million. Really, it comes down to, do you want a boat in retirement, or do you want to, you know, go boating every single day and spend money on gas and gas? Spend ridiculous amounts of money on that? Or do you want to go explore nature and go hiking, like I talked about in the last podcast that I'm getting into? Well, I mean, I think not spend ridiculous amounts. Most people don't. They don't change their spending habits in retirement. They want to continue their same lifestyle as they were still working. So if you got an expensive lifestyle, you better start saving money. Right. But the biggest takeaway of this whole thing, because one and a half million dollars, like you said, like, where do they get. I mean, that's just the average person. Like, like we said, I've seen people retire with 300 grand success. Southeast Ohio, where I grew up, if you. You could probably retire on a couple hundred grand because the cost of living so low. Right. If you code, Cleveland's probably a little higher. If you go to New York City, you probably need 10 million. The big, the biggest takeaway here. The big. Yeah, I can imagine living in New York. Anyway, biggest takeaway, Bill? Having a financial plan to get your lifestyle into the planning software and have a financial planner build out a plan based on what you do, how you spend your money, how you make your money, what you want to do with your money, what retirement looks like, man. Like, that's what you need. Like, just coming up with some random number. Like one and a half million. Okay. Yeah, let's write that down. Like, might as well just go to the craps table and roll some dice. Yeah, random numbers. Just, you know, there's no goals. My point is, like, with that is like, you get to have a goal in mind. Like, we teach Napoleon Hill a lot of times when we teach classes and things like that and our seminars and Napoleon Hill. I have a firm believer in Napoleon Hill and his philosophy. I think you can watch almost all of his mastermind classes on Amazon from the 1950s, 1960s. I've watched a lot of them. But essentially his whole concept is if you have a goal in mind, you will achieve that goal no matter what. Like, essentially all you need in life is to have a goal. Most people just never come up with a goal because the past going to find its way. Like if you have an end goal in mind, you're determined and know you can achieve that goal in your back, your head, you know you can do it. You will find the pathway to do it. And if you don't have a goal of I need to spend $70,000 in retirement, how do you think you're going to actually get there? This is great insight. Young grasshopper, Napoleon Hill, my man. All right. Napoleon Hill philosophy. Yes. Hitting us just with the deep. Smoke some cigars and sit back and relax and just watch. Luke's hitting us with the deep sophistication today. Not just the sophistication. I'm an old soul. Yeah, yeah, you are. And that, that's a good thing, man. It's a good thing. I don't see, you don't see that too often, especially from your young generation. The key is, am I gonna live to be old? That's the. He'll be fine. All right, well, again, great discussion. Again, it just really comes down to, if you don't have a financial plan, you gotta work on that. It's something that you need so that you just have some clarity of like, are you saving enough? Do you have enough? Are you retiring on time? All of these decisions can be determined by building a financial plan. Having a goal of mine. With that. Yep. With that being said, you know, thanks for listening today. If you have any questions, info at SWP Connect. If you have any ideas for future shows, questions, hit us up. Other than that, have a great day. The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial, or tax strategy. It is only intended to provide provide education about the financial industry. Please consult a qualified professional about your individual needs.