00k Retirement How Long Will It Last If Single

In this video we will explore how long $400K will last in retirement if I am Single.

We’re going to explore this retirement situation here how long will 400 000 savings nest egg last when you retire and you are single so stay tuned for the full episode welcome back this is richard with wisdom investor on this channel we cover all types of financial situations related to social security investing for retirement saving for retirement when to retire

And much more today we’re going to look at this question here if a single person would retire they have 400 000 will this last a lifetime now many of you are thinking about retirement or maybe you already are retired but here’s some factors to consider when retiring you want to think about your health condition the age of your retirement what age are you actually

Going to retire are you going to continue to work in retirement you need to take a look at your expenses and income and also your life expectancy we’re looking at a chart here that explains how long my four hundred thousand dollars would last at different rates of return here we have two percent yield four percent yield six percent yield eight percent yield and

You can see here if we use for example twenty four hundred dollars per month you would be able to withdraw two thousand four hundred dollars per month for sixteen point four years if your yield was two percent the larger the yield generally speaking the longer your money’s going to last if we had a six percent yield on our money or rate of return 2 400 per month

Withdrawal in this case would last you 30 years now when we’re talking about yield we’re typically talking about a total return on investments interest dividends net asset value increase where do you get a six percent or eight percent return you’re certainly not going to get it at the bank the banks right now are paying about one percent you would have to invest

In a good diversified index fund here’s a couple examples vanguard wellesley income fund it’s had a average return over 15 years 6.12 s p 500 index has averaged over the last 15 years 12.99 percent keep in mind an index fund like this there’s no guaranteed of your results if you’re going to put your money in a cd certificate of deposit at a bank at one percent

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That money would be guaranteed generally speaking the lower the yield that you’re going to receive on your money the lower the risk if we want to have a higher yield then we take a higher risk in our investment we’re going to take a look at our first example here how long will my money last in retirement if i’m a single person i have saved up four hundred thousand

Dollars in this case we’re going to use age 67 as our retirement age that’s the full retirement age for person born 1960 or later their longevity is going to be 20 years to age 87. the first thing we’re gonna calculate here is our expenses in this case the expenses are four thousand dollars per month or forty eight thousand dollars per year the national average for

A person in retirement is expenses of around fifty thousand dollars per year now there are some states where the average is going to be in the low forties and there’s going to be other states where it could be sixty or seventy thousand dollars per year when we talk about expenses and costs of living in retirement here’s some basic expenses a person wants to take in

Consideration you have your essential average monthly expenses in retirement there’s discretionary expenses and then one-time expenses after you retire so you want to calculate what you think these expenses are going to be in our case here today we’re estimating 50 000 per year the next thing we’re going to throw in here is our social security retirement benefit

In this case we’re estimating a retirement benefit of two thousand dollars per month it’s going to grow at a rate of 2.2 percent which is the average for cola over the last 22 years this leaves a balance of 2 000 needed from the savings we’re gonna have to withdraw two thousand dollars per month to make ends meet we had four thousand dollars expenses we have two

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Thousand dollars income from social security it leaves us a two thousand we’re gonna need to withdraw from savings per month if we do our calculations here on this we’ll find that that four hundred thousand dollars would last thirty years at a four percent yield or return on their money if the money was sitting in the bank at one percent the savings would still

Last 30 years if we go back and look at our chart here for the four percent yield we can see 2 400 withdrawal from 400 000 would last 20 years but in this case we’re also adding 2 000 per month as social security income so that gives us a longer life for our four hundred thousand dollar savings the first example worked out well the two thousand dollars per month

Plus the social security was gonna allow the four hundred thousand dollars to last throughout the entire retirement period now what would be a situation where the savings isn’t going to last or we get a depletion in our nest egg or saving so let’s take a look here if we have a situation where we have higher expenses here’s an example six thousand five hundred

Dollars expenses per month social security in this case is only fifteen hundred dollars so our net is we need to withdraw five thousand dollars per month from our savings the four hundred thousand dollars in this case would only last ten years and that’s with the investment earning about a four percent return of course you could invest more aggressively if you have

A higher risk tolerance and that would help some if you’re earning one percent in a bank the 400 000 would last nine years now what would be the maximum we could stretch our withdrawal to in this case where we have a combination of expenses and income and still make it work in this case we have five thousand five hundred per month expenses fifteen hundred dollars

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Social security gives a four thousand dollar per month withdrawal from savings the four hundred thousand would last more than nineteen years if we also increased it to a six percent return now we can’t just automatically choose an investment that’s going to get a six percent return we would have to have a higher risk tolerance and invest a little more aggressively

So that we could get a higher return on our money if we go back to our chart here and look under the six percent yield category we go down to four thousand dollars per month we’ll see that it would last 11.7 years but we’ve also added the fifteen hundred dollars per month social security this allows the four hundred thousand dollars to stretch out to almost 19 plus

Years our retirement longevity goal was about 20 years here so if i knew that my 400 000 was going to last close to my longevity time period i would probably reduce some of my expenses so that i can cushion some of my savings that would last a little bit longer so in this case how long is my four hundred thousand dollars going to last while i’m in retirement and

I have to withdraw from it in this case two thousand dollars per month withdrawal with along with my social security or pension or any other monies i have would work out just fine four thousand per month plus my social security in this case it’s going to be a stretch i would possibly shoot for about three thousand three thousand five hundred per month there’s

Always going to be something happen during retirement you got to fix something some repair so you’ve got to be prepared for that so i hope this information is helpful thanks for watching stay tuned for our next episode

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$400k Retirement How Long Will It Last If Single By Wisdom Investor