Have you ever been told that you need to have at least a million dollars for you to retire comfortably? Many people have been frustrated by the idea that there's an arbitrary magic number they need to reach to retire. The truth is, retirement planning isn't onesizefitsall, and the amount you need depends on many factors.

James breaks down the process of determining your retirement savings by exploring different income levels and scenarios.

Meet Elon and Elona Dusk, our fictional couple who are both 65 years old. They're considering retirement and want to determine how much they need to comfortably retire with different monthly income goals.

$5,000 per Month: If they aim for a monthly retirement income of $5,000, they have Social Security benefits that would provide a combined $4,443 per month at age 65. This leaves a shortfall of $557 per month or $6,700 per year.

Assuming a 5% withdrawal rate, they would need a portfolio of approximately $134,000 to make up this difference. However, if they waited until their full retirement age, they could rely entirely on Social Security, eliminating the need for a portfolio.

$10,000 per Month: If they want to spend $10,000 per month in retirement, their Social Security benefits at age 65 would be $4,065 after taxes, leaving a shortfall of $5,935 per month or $71,220 per year.

With a 5% withdrawal rate, they would need a portfolio of approximately $1,583,000 to bridge the gap. Waiting until retirement age would decrease the required portfolio size to around $1,447,000.

$15,000 per Month: Lastly, if Elon and Elona want a monthly income of $15,000, their Social Security benefits at age 65 would provide $3,877 after taxes. This leaves a shortfall of $11,123 per month or $133,476 per year.

With a 5% withdrawal rate and a 15% effective tax rate, they would need a portfolio of approximately $3,140,000 to cover their expenses. At full retirement age, this portfolio requirement would decrease to about $3,000,000.

The key takeaway here is that your retirement savings target can vary significantly based on factors such as your Social Security benefits, age of retirement, and desired income level. Small adjustments in your claiming strategy can result in significantly higher benefits, reducing the burden on your portfolio.
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⏱Timestamps:⏱
0:00 Intro
1:16 Different perspective
1:57 Elon and Elona
2:42 5k per month
7:45 10k per month
13:40 15k per month
18:44 Inconsistent expenses
19:41 Understanding important factors
20:21 Outro

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