How Do I Know When I Have Enough Money to Retire?
Summary
TLDRIn the video, Chris Hogan addresses Dominic's retirement savings concern, suggesting the use of the 'Retire Inspired Quotient' (RIQ) tool on chrishogan360.com for personalized retirement planning. He emphasizes maximizing 401k and IRA contributions, and highlights the importance of living off investment returns without touching the principal. Hogan also discusses the significance of financial independence in lifestyle control and generosity, advocating for a retirement goal that provides sufficient passive income for desired living standards.
Takeaways
- 💼 The speaker introduces a free tool called the 'Retire Inspired Quotient' (RIQ) to help understand retirement goals and investment needs.
- 🚀 Dominic's goal of 3 million dollars by age 62-67 is discussed, with the speaker encouraging him to continue maximizing his 401k and Roth IRA contributions.
- 🧮 The speaker provides a rough estimate that saving 15% of household income from age 30 to 70 in a good mutual fund could result in around 8 million dollars.
- 💡 The importance of understanding one's lifestyle, travel desires, and generosity goals in determining the ideal retirement savings amount is highlighted.
- 💰 The concept of living off the interest or returns from the retirement savings (the 'golden eggs') without touching the principal (the 'goose') is explained.
- 📉 The speaker emphasizes the significance of being debt-free to have more control over one's lifestyle and retirement planning.
- 🌐 The website chrishogan360.com is mentioned as the source for the RIQ tool, which allows users to input their financial goals and expectations.
- 🤔 The speaker suggests that having a retirement savings goal that exceeds the current projection (like 6 million instead of 3 million) is perfectly fine.
- 💡 The idea of leaving a legacy for future generations through wise financial planning and investment is discussed.
- 🔢 The speaker mentions the importance of the 'retirement IQ' and understanding the math behind saving and investing for retirement.
- 🏡 The potential for using retirement savings for various life goals, such as travel, buying a car, and practicing generosity, is mentioned.
Q & A
What is the purpose of the 'Retire Inspired Quotient' tool mentioned in the script?
-The 'Retire Inspired Quotient' (RIQ) is a free tool designed to help individuals understand their retirement savings goals, how much they need to invest to achieve those goals, and to provide a ballpark number for their retirement fund.
What is the current maximum amount one can contribute to a 401k annually?
-As of the script's date, the maximum annual contribution to a 401k is $19,500, with an additional catch-up provision of $6,000 for individuals over the age of 50.
What is the significance of the 3 million dollar retirement goal mentioned by Dominic?
-The 3 million dollar goal is Dominic's personal retirement target, which he believes will provide him with financial security and the ability to maintain his desired lifestyle after retiring between the ages of 62 to 67.
What is the 'baby steps' approach referred to in the script?
-The 'baby steps' approach likely refers to a systematic, step-by-step financial planning method that includes maximizing retirement accounts like the 401k and IRAs, which can lead to a substantial retirement fund over time.
How does the script suggest one should live off their retirement savings?
-The script suggests living off the interest or earnings from the retirement savings (the 'golden eggs') without touching the principal amount (the 'goose'). This strategy allows for a sustainable income stream throughout retirement.
What is the average household income in America according to the script?
-The script mentions that the average household income in America is just under $60,000.
What is the potential outcome if one saves 15% of the average American household income from age 30 to 70?
-If one saves 15% of the average American household income from age 30 to 70, they could potentially accumulate around eight million dollars in a good mutual fund, according to the script.
What is the recommended withdrawal rate from retirement savings to ensure sustainability?
-The script suggests a withdrawal rate of 8% to 10% of the retirement savings to ensure sustainability, allowing individuals to live off the earnings without depleting the principal.
How does the script relate the concept of 'not shooting the goose' to retirement planning?
-The script uses the metaphor of 'not shooting the goose' to emphasize the importance of preserving the principal amount of retirement savings, ensuring a continuous income stream without exhausting the initial investment.
What is the role of debt in retirement planning as discussed in the script?
-The script suggests that being debt-free is crucial for retirement planning as it reduces financial obligations, allowing individuals to have more control over their lifestyle and retirement savings.
How does the script address the issue of contentment in relation to wealth?
-The script touches on the idea that contentment is not necessarily tied to the amount of wealth one has, but rather to one's ability to reach a state of satisfaction independent of material possessions.
Outlines
💼 Retirement Savings Goal and Strategy
The script addresses Dominic's question about setting a retirement savings target. The speaker introduces the 'Retire Inspired Quotient' (RIQ), a free tool on their website to help individuals calculate their retirement needs. Dominic's current strategy of maxing out his 401k and having a Roth IRA is acknowledged, but the speaker emphasizes the importance of understanding one's lifestyle and financial goals. The concept of living off the interest without touching the principal is discussed, with examples of potential annual income from a 3 million dollar investment at different interest rates. The speaker also touches on the benefits of being debt-free to better control one's lifestyle and the importance of contentment in achieving financial peace.
📊 Understanding Retirement Finances with RIQ
This paragraph delves into the specifics of the RIQ tool, which allows users to input various parameters to estimate their retirement needs. It explains the purpose of the tool in making people aware of the relationship between saving, investment growth, and future income. The tool helps users to visualize how their 401k contributions can serve as a future paycheck, adjusting for inflation. The speaker encourages viewers to visit their website to explore the tool and gain a deeper understanding of their retirement planning.
Mindmap
Keywords
💡Retirement
💡401k
💡Roth IRA
💡Retire Inspire Quotient (RIQ)
💡Investing
💡Lifestyle
💡Net Worth
💡Interest
💡Inheritance
💡Debt
💡Generosity
Highlights
Dominic from New Jersey inquires about a retirement target amount and whether his goal of 3 million by age 62-67 is sufficient.
Chris Hogan introduces the RIQ (Retire Inspire Quotient), a free tool on his website to help determine retirement savings goals.
Hogan emphasizes the importance of maxing out 401k contributions, including catch-up provisions for those over 50.
The discussion suggests that following 'baby steps' can lead to exceeding retirement savings goals.
Lifestyle, travel, and giving are factors that influence how much one should aim to save for retirement.
Hogan provides a rough estimate that saving 15% of household income from age 30 to 70 could yield around 8 million dollars.
A 3 million dollar retirement fund could potentially generate $300,000 annually with a 10% return.
The key is to live off the interest without touching the principal, akin to not killing the goose that lays golden eggs.
Being debt-free allows for more control over lifestyle and retirement planning.
Hogan shares personal anecdotes about the importance of contentment and not accumulating wealth for the sake of greed.
The transcript discusses the potential for leaving a legacy through teaching and financial support for future generations.
The importance of the RIQ tool in understanding the relationship between savings, investment, and future income is highlighted.
The transcript concludes with a reminder to visit chrishogan360.com for the RIQ tool and further retirement planning resources.
Transcripts
today's question comes from dominic in
new jersey
and he asks how much or a rule of thumb
should be my target for retirement
my current goal is to achieve around 3
million before the age of 62 to 67
depending upon my retirement medical
benefits
i currently max out my 401k and have a
roth ira
but still feel like it won't be enough
is there an ideal amount
well here's the reality dominic is we've
developed a free tool that is going to
help you with this
it's called the riq the retire inspire
quotient a free tool once again at my
website chrishogan360.com
that will help you understand your
ballpark number but it'll take it a step
further my friend
and show you how much you need to be
investing to get there now you're maxing
out 401k so you're putting
19.5 away in it and if you're over 50
you've got an extra 6000
you could do on a catch-up provision as
well as your iras you don't tell me your
age but i'm going to tell you this
if your goal is to have around 3 million
and you're following the baby steps
you're going to have more than enough
right because it's going to depend on
your lifestyle
how much you want to travel how many
mission trips do you want to do
and how much giving so the good thing is
is you want to take control
and you want to be the guide of that and
what you're spending and how you're
living
yeah that the you need to know your
retirement iq your
iq that's a good thing and some good
rough and dirty numbers are this
okay if you do what we teach you say 15
of your household income now we don't
know your age and we don't know
um your income but the average household
income in america is just under
60 000 59 and some change
okay and so if you save 15 of that from
age
30 to age 70 you would have
about eight million dollars in a good
mutual fund
if i'm half wrong
you still got double what you're
projecting
and the three million mark here's a good
number okay let's say let's just make up
numbers let's say you made ten percent
on your money at three million dollars
what is that
that's three hundred thousand a year if
you made ten percent you could pull
three hundred thousand a year off and
not touch the three million just the
golden eggs but don't touch the goose
if you pulled off eight percent that'd
be 240
000. so as long as you think you can
live on that then 3 million will be
enough
the trick is to try to have a nest egg
that you can live off of the
money that it creates the way you're
willing to invest it without touching
the egg
that's right i keep mixing the metaphor
up here but
don't crack and scramble the nest egg or
don't shoot the goose that's laying the
golden eggs there's another way of
saying it
the principal amount your base amount is
your goose
and you know you leave that as an
inheritance if you want to burn through
it you can burn through it it's your
money do whatever you want
but you can you can create a perpetual
motion machine
that will sit there and spit off golden
eggs as long as you don't shoot the
goose that's right and here's the
reality
you get yourself out of debt you don't
have the requirement for as much
so that allows you to be more in control
of your lifestyle and what it is you're
doing
you can always find something to do with
it oh yeah give it
i mean and there's other you know
there's another place to travel you
haven't been with the car to buy you and
bought and there's other stuff you can
do
there's ways you can enjoy it with
outrageous generosity and
um i've never met someone that goes i
have too much
no me neither i have met people who are
spiritually inept and they never get to
enough
because they don't they can't reach
contentment
as an independent discussion apart from
the amount
right but in terms of the math part i've
never met somebody went
yeah i just i screwed that up i got
double what i should have had
i never hear that no i've never either
so if your three is six
or your six is 12 million then that's
okay that's all right i never dreamed i
would end up where i am today
when i was broke and starting to invest
i just wanted to reach enough that i
could live off the income of it
and once i reached that then i just kept
going
uh but not because i'm greedy or piling
up money or i'm building bigger barns or
i'm
you know it's i can increase my
generosity and i can increase the
fact that i change my family tree and
you know if if i've got my way if i
teach my kids and my grandkids
and i leave them money this could be the
dumbest ramsay
in the stretch of family tree i could
have changed the whole stinking thing
yeah you really good get rid of the
stupidity and the brokenness all in one
generation
just leave it all with this one with the
old man that did it he's the one that
changed it you know
and that's that's cool that's a cool
goal to have
so i think he's in a great shape there i
do too now once again
if you're out there and you're thinking
okay how much do i need well again the
riq is the retirement tire inspired
quotient
free tool that allows you to plug in
numbers plug in
and how much you want to live on and how
much and how long
and it's a tool so you can change the
rates of return and
withdrawal rates the goal is is to make
people more
aware of why you're saving your 401k
becomes your paycheck later
right so we've got to put money in to be
able to grow to outpace inflation
so you have a paycheck later and that's
what dave was just talking about so
check it out chrishogan360.com
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