How Much Do You Need To Retire | What The Experts Say

Summary

In this video, Erin explores the varying retirement strategies of five prominent financial experts: Dave Ramsey, Suze Orman, Mr. Money Mustache, David Bach, and Robert Kiyosaki. Each expert offers different advice on how much to save, how to manage retirement withdrawals, and the philosophy behind their strategies. While Ramsey and Orman suggest saving a set percentage of income and following withdrawal rules like the '4% rule', Mr. Money Mustache emphasizes frugality and the importance of saving more. Kiyosaki, on the other hand, advocates for investing in cash-flow-producing assets instead of saving. Erin concludes that there is no one-size-fits-all approach, and individuals should choose strategies that align with their personal financial goals.

Takeaways

• 😀 Dave Ramsey recommends saving 15% of every paycheck for retirement and assumes a 12% annual return, which leads to an 8% safe withdrawal rate.
• 😀 Susie Orman advocates saving 15-20% of your income for retirement and uses the 4% rule for withdrawals, with a focus on having 2-3 years of living expenses saved as an emergency fund.
• 😀 Mr. Money Mustache believes in saving a high percentage of your income (50% or more) to retire quickly, using the 4% rule for withdrawals, and emphasizes cutting unnecessary spending.
• 😀 David Bach advises saving 10-20% of income and suggests gradually increasing savings in small steps, aiming to accumulate 10 times your annual income for retirement.
• 😀 Robert Kiyosaki advocates for purchasing income-producing assets rather than saving money, suggesting that wealth comes from owning cash flow-generating properties and businesses.
• 😀 The FIRE (Financial Independence, Retire Early) movement is highly controversial, with experts like Susie Orman critical of its aggressive approach to early retirement.
• 😀 Dave Ramsey's retirement advice is seen as aggressive, assuming high returns and high withdrawal rates that may lead to running out of money in retirement.
• 😀 Susie Orman recommends conservative financial strategies, such as not adjusting withdrawals for inflation in the first 3 years of retirement, to avoid depleting funds.
• 😀 Mr. Money Mustache focuses on reducing expenses rather than boosting income, arguing that living on less reduces the amount you need to save for retirement.
• 😀 Robert Kiyosaki's philosophy centers on the idea that financial independence comes from building assets that generate continuous income, rather than saving a fixed percentage of income.

Q & A

What are the main questions people have about retirement, according to Erin?

The main questions people have are: How much should I be saving for retirement? How much do I need once I retire? And how much can I safely withdraw during retirement?

What is Dave Ramsey’s approach to retirement savings?

Dave Ramsey recommends saving 15% of every paycheck and assumes a 12% annual return on investments, with an 8% safe withdrawal rate. For example, if you want an annual income of $50,000, you'd need a nest egg of $625,000.

Why is Dave Ramsey’s retirement approach considered aggressive?

Dave Ramsey's expected return of 12% annually is higher than the historical average of the stock market, which has returned around 10% per year. His 8% withdrawal rate is also considered aggressive and could lead to running out of money if the market underperforms.

How does Suze Orman approach retirement savings?

Suze Orman suggests saving 15-20% of your income for retirement and follows the 4% rule for withdrawals. To ensure you don’t run out of money, she also recommends having 2-3 years' worth of expenses saved up in an emergency fund before retirement.

What is the 4% rule that Suze Orman follows?

The 4% rule suggests that you can withdraw 4% of your portfolio’s value every year during retirement without running the risk of depleting your savings.

What is Suze Orman’s stance on the FIRE movement?

Suze Orman is not a fan of the FIRE (Financial Independence, Retire Early) movement, especially for younger people. She believes retiring early with minimal savings is a financial mistake.

What is Mr. Money Mustache’s approach to retirement?

Mr. Money Mustache focuses on high savings rates. The more you save, the sooner you can retire. He advocates cutting unnecessary expenses and recommends withdrawing 4% of your savings per year in retirement, similar to Suze Orman.

How does Mr. Money Mustache differ from Dave Ramsey and Suze Orman in terms of saving for retirement?

While Dave Ramsey and Suze Orman focus on a percentage of income to save (15-20%), Mr. Money Mustache emphasizes the importance of savings rate. The higher your savings rate, the quicker you can retire. He suggests focusing more on cutting expenses rather than boosting income.

What is David Bach’s philosophy on retirement savings?

David Bach’s philosophy is to 'pay yourself first' and stop wasting money on small daily expenses. He recommends saving at least 10-20% of your income to achieve financial independence and suggests that you aim to save 10 times your annual income for retirement.

What is Robert Kiyosaki’s approach to retirement and financial independence?

Robert Kiyosaki advocates for buying income-producing assets rather than saving money. He believes that saving is not the key to wealth, but rather owning businesses and properties that generate cash flow to cover liabilities and expenses.