Don and Mary are looking to retire at 63 and want to see what a reasonable withdrawal rate is, when to start social security, and what small tweaks can improve the success of their retirement plan.
-Dave Zoller, CFP®
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I’m 63 with $1.6M. Can I Retire? Social Security & Withdrawal Strategies To Improve Retirement Plans
As individuals approach retirement age, one of the most pressing questions on their minds is whether their savings are enough to comfortably retire. This question is particularly crucial for those who are 63 years old, like you, and have accumulated $1.6 million in savings. While the answer depends on various factors, including lifestyle choices and future expenses, understanding Social Security benefits and implementing smart withdrawal strategies can significantly improve retirement plans.
Firstly, let’s delve into Social Security benefits, a valuable component of retirement income. The average monthly Social Security retirement benefit in 2021 is approximately $1,500. However, the actual benefit amount can vary based on your earnings history and when you choose to start receiving benefits. Although you can start claiming benefits at 62, delaying until full retirement age (FRA), which ranges between 66 and 67 depending on your birth year, will result in higher monthly payments. Delaying further until age 70 can increase the monthly benefit even more, by roughly 8% for each year you delay. Therefore, if your savings allow for it, waiting until age 70 to claim Social Security may substantially bolster your retirement income.
In addition to Social Security, an effective withdrawal strategy is crucial to ensure your nest egg lasts throughout your retirement years. One popular approach is the 4% rule, which suggests withdrawing 4% of your portfolio in the first year of retirement, and adjusting withdrawals thereafter according to inflation. However, this rule may not be suitable for everyone, especially considering market fluctuations and individual circumstances.
As you retire at 63, you may want to consider a dynamic withdrawal strategy that incorporates your investment mix and future expectations. A blended approach combining fixed and flexible withdrawals could provide stability while allowing for potential growth. Initially, you could base withdrawals on a certain percentage of your portfolio, such as 3-4%, later transitioning to a more dynamic approach considering prevailing market conditions. Consulting a financial advisor with expertise in retirement planning can help tailor a withdrawal strategy to your specific needs.
Furthermore, it’s important to review your planned expenses during retirement. Consider factors such as healthcare costs, leisure activities, and potential unforeseen expenses. Evaluating your desired lifestyle and priorities will enable you to estimate whether $1.6 million will suffice for your retirement years.
Finally, don’t forget to account for other sources of income or assets, such as investment properties or pensions. These additional streams can supplement your retirement earnings and, when factored in, may alleviate concerns about your $1.6 million being insufficient.
In conclusion, retiring at 63 with $1.6 million is a favorable starting point, but careful planning is necessary to ensure long-term financial stability. Understanding Social Security and utilizing smart withdrawal strategies can significantly enhance your retirement plans. Consider delaying Social Security benefits for a higher monthly payment, assess a dynamic and personalized withdrawal strategy, evaluate expected expenses, and factor in other sources of income to maximize the potential of your retirement savings. Ultimately, consulting a financial advisor knowledgeable in retirement planning will provide invaluable guidance to help you make the best decisions for a comfortable and secure retirement.
This is my fifth year after retirement. I’e been following the 4% rule thing I saw on a youTube channel, but this isn’t really how hard I expected things to be. After I cashed out a lump sum, I still have about $760k left, but at this rate, and with how the market is (we were putting money away in an index fund), I’m starting to get really worried.
I’m a 56 year old widow. I plan to retire at 60 to collect survivors benefit but i make a six figure income on a low stress work at home job plus i receive my husband’s income. And i have 1M plus properties for retirement. What’s holding me back is my daughter’s future. She’s graduating from college in Econ. I might have to help her and pay for her health insurance. As a single parent, I’ll have to pay part of her wedding. I worry about her future not sure if retiring at 60 is a good idea.
Doesn’t your spending decrease as you get older in retirement thus negating the inflation risk?
Short answer:. Yes.
I smell toast in this environment today. Rentals/property adjust with inflation not stocks bonds mutual funds
Sell the house down size move to a tax free state
I'm 66, and only have a little over $200,000 savings, no debt and $4,300 monthly (varied) income, and I'm "retiring" (in The Philippines) – no problem….
Thank you. Just what I needed to watch. My hubby and I are directors of our farm business and own property, plus small pensions. I am nearly 52, hubby is 55. We have started to save to retire from the farm, and possibly live on rental income, I'd really appreciate you go LIVE and talk about how to earn passive income online and retire comfortably, let’s say $1M.
Hello Dave, would you please consider making a video with the following information? The question is what is the ideal withdrawal rate for a married couple would be with these numbers.
401k=600k, roth ira= 100k, stocks=80k, pension=800k. Selling 550k home in NJ to downsize to home maybe around 400k in Washington state. His SocSec=2400/m, her SocSec=700/m. He is 62, she is 66.
Thank you.
Why put an inflation factor to your expenses? From my experience in retirement we shift our expenses month to month and year to year.
$1.6million. I’d pull the trigger. Get a nice small place out in the country, wear a robe and live like Hugh Hefner
This video is so good, I love this
Can you contact me I’d like to discuss my situation with you thank you
I can't believe this is even a question. That's a lot of money, and if they have social security they should be fine…reduce the lifestyle.
The simple answer is yes unless your a spend freak.
What are you spending $8k a month on in retirement?
First of all, Great video! I really like the straightforward planning scenarios, then layering the what if cases on top. Retirement is a continuous planning process!!
I follow the Obits section of the newspaper where I used to live. While you might plan to live into your mid 90's, the fact of the matter is, most of us won't. Those I worked with passed away in their late 60's to early 70's. Very few made it to past 80.
6% return forever? Hmmm.
How do you possibly spend $100k a year when you’re in your 80s , most people that age do nothing !
I am 42, if I had 1.6 million, I could retire now.
This must be for rich people every person i know that’s retired didn’t have 401k or pensions they survive in SS alone, it’s def not ideal that’s just how poor people end up living.
With One and a half million dollars you are a millionaire…
Don't mary. Hmm… Good retirement strategy.
Even with $1.6 million saved every time you spend a buck the pile goes down. So, keep the day jobs until disabled or fired.
You need $5 milion !
No
buy a home 4 $600,000.00 n live with the balance until u die
Big money , go to SE asia
$8k per month is a lot of money to spend. I have $7k of passive income and I live on $3.5k of that and reinvest the other $3.5k per month. I travel all I care to travel. So my plan is to continue increasing my retirement savings even in retirement without setting a death date. I refuse to die. I plan on living forever but if that fails my kids can have what's left over.
um,,,, of course you can.
$8k a month in expenses??? Is that what they’re paying now or is it just an estimate? Because we’re talking almost six figures a year in expenses excluding taxes… that seems unsustainable.
Again, what about the 99.9999999 percent of people who don’t have 1.6 mil? Anyway you can direct your videos away from the wealthy few?
How about doing a retirement talk for real people. Not those with a ton of money for once.
I would have said yes you can retire on 1.6m a year ago. Today ahhh no.
I like Dave.
He seems straightforward and earnest.
Yes in Bolivia….
Great video! BTW who knows the easiest ways to make money now, Real estate, Stocks and …..(POOL⚖️)
Investing in stocks or real estates are very good ideas though real estate investment seems a bit more complex. Who else is in line with me?
I’m trying to take full advantage of the new year, I’ve allocated my capital in a safe and sustainable way but still leave room for excitement for individual stocks, cryptos and new exciting opportunities!
Wonderful video
I'm 63 with $200,000. Can I retire? That is the question (Definitely not).
If you can not live on $1.6M, you are living way above your means.
I didn’t see the impact of SS at age 67 in the graph?