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The PERFECT Retirement Plan: Building the Life You’ve Always Dreamed Of
Retirement is a phase of life most people eagerly look forward to. It’s a time where you can say goodbye to the daily grind and enjoy the fruits of your labor. However, planning for retirement can sometimes be a daunting task. With the right approach and careful consideration, you can create the perfect retirement plan that aligns with your goals and aspirations. In this article, we will discuss some essential steps to help you build your ideal retirement plan.
Evaluate Your Financial Situation:
Before embarking on planning your retirement, it is crucial to assess your current financial status. This includes evaluating your income, expenses, savings, and debt. Determine whether you have enough funds to cover your living expenses and consider any upcoming financial commitments. Once you have a clear understanding of your financial situation, you can determine how much you need to save for a comfortable retirement.
Set Clear Goals:
Retirement means different things to different people. For some, it may mean traveling the world, while for others, it may involve engaging in hobbies or spending quality time with family and friends. Once you have a vision for your retirement, set clear goals that will help you achieve it. Your goals should be specific, measurable, achievable, realistic, and time-bound (SMART goals) to keep you focused and motivated.
Develop a Savings Strategy:
Once you have your goals in place, it’s time to develop a savings strategy. Consider how much you need to save each month to reach your retirement savings goal. If possible, automate your savings by setting up automatic deposits into retirement accounts. Diversify your investments and consult with a financial advisor to ensure you’re making sound investment decisions aligned with your risk tolerance and retirement goals.
Prepare for Health Care Costs:
Health care costs are a significant concern during retirement. As you age, it is essential to have a plan in place to cover medical expenses. Evaluate different health care options, such as Medicare and long-term care insurance, to ensure you are adequately protected. Factor in potential medical costs when calculating your retirement savings goal.
Consider Working Part-time or Taking on Hobbies:
Retirement doesn’t necessarily mean completely quitting work. Many people find fulfillment and purpose by engaging in part-time work or pursuing hobbies during retirement. Working part-time can provide supplemental income while keeping you socially and mentally active. Similarly, indulging in hobbies can provide a sense of fulfillment and joy. Consider all the possibilities that can enhance your retirement experience.
Create a Budget for Retirement:
With a clear understanding of your expenses and savings, create a budget for your retirement. Set aside funds for essential expenses, such as housing, utilities, and healthcare, as well as discretionary expenses, such as travel, entertainment, and hobbies. Sticking to a budget will ensure your retirement funds last as long as you need them.
Regularly Review and Adjust Your Plan:
Life is dynamic, and your retirement plan should be too. Review your retirement plan regularly and make adjustments as needed. Factors such as changing market conditions, unexpected expenses, or a revised vision for retirement may require modifications to your plan. Stay proactive and consult with a financial advisor to ensure you’re on track.
Retirement is a significant life event that requires thorough planning and consideration. By evaluating your financial situation, setting clear goals, implementing a savings strategy, preparing for healthcare costs, considering part-time work or hobbies, creating a budget, and regularly reviewing and adjusting your plan, you can build the perfect retirement plan. Remember, retirement is a time to enjoy life and fulfill your dreams – make sure your retirement plan reflects that.
just what I needed to watch.
My wife and I are directors of our farm business and own property, plus small pensions. I am nearly 55, my wife is 52.
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.
Josh about a week ago after watching one of your videos, I made a significant change to my retirement plans. This stock market scares the heck out of me. I’m retired with a mortgage $270K, on a house worth conservatively $600K, 3.25%. Low tax Tennessee. Our family retirement accounts are about $1,200,000, $170,000 of which is Roth. I’m retired 63yr old, wife 52 still working. I, have a small military pension and good retirement healthcare, $40 per month. I’m not a market timer, but was having trouble sleeping. I’m waiting till 70 to take SSI, calculated at approximately $4450mo with average inflation increases. Plan on wife quitting work in a couple of years. I took all funds except Roth, (plan on spending that last), if ever. I laddered the rest in CD’s with Vanguard and Fidelity. This return, around 5%, allows us to live better than we could have imagined, even considering inflation. Throughout the last week of market turmoil, I slept like a baby. One phrase you said kept ringing in my ears, “you’ve already won the game, why are you still playing”. Thanks for the perspective!
This couple makes $275K per year and were only able to save $300K in their 401K. This tells me that they spent most of their $275K earnings each year. Saying that they only need 50K per year in retirement is difficult to believe. Josh, this is not a knock on your plan or your math, I just don't believe the will be able to live on $50K now that they are retired.
What's the title of the book? It was backwards in the video.
Half in pre tax and other half in after tax. Will supplement pension and social security supplement with saved cash and pre tax until age 62 at which then I will collect reduced soc sec benefit which combined with pension should be more than enough without having to touch after tax dollars as a 6c retirement employee. Let the after tax dollars grow and pass on to kids. Done.
I am 35 years old, will the information still be good when I am in my sixties.
Hey Josh,
Have you heard of After-tax contribution in 401k? I have had Traditional and Roth for years. I’ve been putting money to Traditional but they opened After-tax contribution option. They explained that instead of savings account, I should put my money in to After-tax like a saving account. I can withdraw before 59 and half but grain can be taxed as same as capital gain. I can invest up to 10k per year is my understanding. Can After-tax contribution be same as save 3 month emergency fund?
So maybe I'm missing something about the Roth. What is the difference if, say I'm 60yo–past the penalty age of 401k withdrawal, and I take 50k out of my 500k IRA and just invest it in a couple of ETFs. Now I know I'll pay the tax on the withdrawal. So what is different if I "convert" 50k from my 401k to a Roth. I still pay the tax at the time of the conversion–right?
Damn…. you're best video yet. Not a high bar, but still a good video.
I have $500k in my IRA and I retired this year at 59. How much can I convert to a Roth each year???
Is this a repost of an older post, I think so.
Generally agree that Roths are useful. However, be careful if you plan to be on ACA insurance. Conversions will make you lose a lot of you tax credits. IRMAA much less of an issue.
This year we CONTRIBUTED to Roths(for last year)with some PT income. Also received $15,000 in ACA credits, that we did not want to lose. Ended up paying NO income tax, getting a savers credit for $2k. Only had to pay some payroll taxes. We will try to contribute again for this year. Same with HSA.
We will try some CONVERSIONS, once on Medicare, and are spending from portfolio to get to 70. All or money went in at higher rates, so only interested in conversions in the teen brackets.
Also be aware of the math on conversions that says that tax free growth is the same as taxable growth, if the tax rates are the same when you pay them. That also means that paying a higher rate to convert, is usually a bad idea
Thanks Josh
Josh, this is probably your best video EVER! Spot on for sure.
Since they converted the ira to a Roth won't they have to wait 5 years before they touch the converted money and the growth?
What happened with scruffy Josh?
Hah! Look at that handsome, professional young man. I would buy a suit, and maybe a pair of new shoes from that guy. Just kidding Josh; great stuff!
The Hair is looking high and tight.
I'm in 36% tax bracket now, 401K seems to make more sense than a roth right now, I didn't do the math, but seems right. When I take it out, I should be in the 12% tax bracket.
Josh, where can I find this book? Or your book on this
So people getting pension are screwed.
Great info!
Another benefit of the Roth that I haven’t heard you talk about is that you can put more away in a Roth than in a traditional account. Effectively you are also contributing your taxes as well. This results in more sheltered money. This works best when you are maxing out your savings already and have more.
Josh, one of your best videos yet. Thank you.
Yes, I'm 67.5 years young. I have not filed for social yet. Planning to wait till 70.
I followed your recommendation last year and open a ROTH and converted some of the money in the IRA to the ROTH. I will do so again next year and in 2025. I get to age 70 in late 2025. I'll plan for social then. Then, since I open the ROTH in 2022, the 5 year rule for the ROTH would have been satisfied on Jan 1st 2026, at age 70.
Looking forward to my investments in the ROTH to build from now till then.
I loved the part at the end about "Not paying tax again forever." My hope is that in 20 years longevity research comes up with a pill that makes as 2 years younger for every year we grow older. Then, the not paying tax forever would be real real and AMAZING!
Wish that I smacked a family member with your books before they retired a decade ago. The surviving spouse is considering going back at the age of 70 due to finding (spouse) SS can't pay the bills.
I have to evaluate my retire strategy as to Roth conversion and taxes. I'll have about $34k in pensions at 60 and I'm planning on collecting SS at 62. I'll have to see the best method of limited Roth conversions compared to taxes when I stop working at 60. I'll have about 70k in saving also. could be the way to go until I collect SS and do the Roth conversions at the same time Trying to use your best methods in lowest taxes with conversions. I have about 800 k in 401 and 50k in a Roth. since pensions are taxed at OI, it will effect my SS taxes based on the total OI taxes. trying to stay at the lowest rate I can. have to see the tax bracket I'm in to see what the impact is. Thanks for the insight. makes one think a little more of the different options.
What about Medicare IRRMA with 2 yr look back? Wont they have to pay Max Medicare Premium?
Thank you for what you share with us scared about be retired citizens. I am thinking about purchasing a QLAC from my 491k savings and defending the income to the age of 75 for my and I Any thoughts?