How Do I Know When I Have Enough Money to Retire?

Summary

In 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

00:00

💼 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.

05:02

📊 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.

Keywords

💡Retirement

Retirement is the period after one ceases employment from a long-term career. In the context of the video, it is the main theme as the discussion revolves around planning for financial security during this phase of life. Dominic's goal of achieving 3 million by the age of 62-67 is a prime example of retirement planning.

💡401k

A 401k is a type of retirement savings plan in the United States that allows employees to save and invest a portion of their income before taxes. In the script, Dominic is maximizing his 401k contributions, which is a key strategy for building his retirement fund.

💡Roth IRA

A Roth IRA is an individual retirement account that allows after-tax contributions to grow tax-free and be distributed tax-free in retirement. The script mentions Dominic's Roth IRA as part of his retirement savings strategy.

💡Retire Inspire Quotient (RIQ)

The RIQ is a tool mentioned in the video that helps individuals calculate their retirement savings needs. It is a unique concept introduced in the script to provide a personalized retirement savings target.

💡Investing

Investing is the act of allocating resources, such as money, with the expectation of generating an income or profit. The video emphasizes the importance of investing in retirement accounts like 401k and IRAs to grow wealth over time.

💡Lifestyle

Lifestyle refers to the interests, opinions, and behavioral patterns of an individual, group, or culture. The script discusses how one's desired retirement lifestyle impacts the amount needed for retirement, including travel and charitable giving.

💡Net Worth

Net worth is the value of an individual's total assets minus their total liabilities. The video uses the concept of net worth in the context of Dominic's goal to reach 3 million dollars by a certain age.

💡Interest

Interest in a financial context is the money paid or received for the use or loan of money. The script uses the term to illustrate how a retirement fund can generate income, such as making 10% on 3 million dollars annually.

💡Inheritance

Inheritance is the process of passing on assets, money, or property after death. The video touches on the idea of leaving an inheritance as part of one's retirement planning and wealth management.

💡Debt

Debt is an amount of money borrowed by one party from another, with an agreement to repay it. The script suggests that being out of debt can reduce the amount of retirement savings one might need, allowing for more control over one's lifestyle.

💡Generosity

Generosity is the quality of being kind and giving, often in the form of money or resources. The video discusses the potential for using retirement savings for acts of generosity, such as charitable giving.

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