How much do you REALLY need to save if you want to retire? Why are so many scared to find out? Is there an easier way to do it? Anti-Financial Advisor – Chris Miles will share exactly WHY many have no idea what it takes and why so many aren’t making it. He’ll also share how some of his clients have done it MUCH faster with less money.
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How Much Do You Need To Save For Retirement
Welcome to this show that’s for you, those of you who worked so hard for your money and you’re now ready for your money to start working harder for you today. You want that freedom of cashflow now not 30 or 40 years from now, but today so that you can live that life that you love with those you love. Most importantly, it’s not about living rich. It’s about living a rich life because as you are blessed financially, you now have a greater capacity to bless the lives of those around you. That is the purpose of the show, to create a ripple effect in the lives of others.
Thank you for joining us, for your ripple effect, for binging and sharing this show as well as trying to make the world a better place and allowing me to also do the same for you. As a reminder, if you haven’t been to our website already, go and check out MoneyRipples.com. On there, we got great things about infinite banking. We can go down that rabbit hole, learning how you can not only protect your money and have this tax-free supercharged savings account but get your money to pay you twice. Go and check that out today at MoneyRipples.com.
Here’s the big question, and this is a question I got all the time as a financial advisor when I used to be the traditional mainstream financial advisor, which is, “How much money do you need in retirement? How much is it going to take for you to be able to do that?” To be able to figure this out, I had to go and look up some statistics. In fact, here’s a study that came out that might surprise you. It might shock you. At the same time, it might not. An article came out saying in the survey that we have no idea how much we’ll need for retirement. This shouldn’t be a shocker for many of us. The statistics came out, this is from Transamerica when they did their research in 2023.
It says, “Based on the median number, workers surveyed estimate they’ll need $500,000 by the time they retire in order to feel financially secure.” Now, they vary from generation to generation. Baby Boomers think they need $750,000. X-ers and Millennials think $500,000. Generation Z somehow thinks $250,000 is enough, but here’s the thing. Approximately, 1 of 5 workers estimate they’ll need at least $2 million, and more of those are Baby Boomers think that.
How do they come up with these lofty figures that ask? It says, “Among those providing an estimate, nearly half the workers said they guessed the amount they needed to save for retirement.” They said that’s a big worry because it’s already shaking enough with retirement statistics. Here’s those that guess, 40% of Baby Boomers are guessing. Most everybody else about 45%. Remember, everybody’s guessing.
This is a survey of 5,700 workers that did that. They said, “Only 1 in 5 workers use a retirement calculator or use some worksheet, and even fewer based on the advice given to them by a financial advisor,” who, by the way, also used financial calculators. Here’s the big thing. For those who prefer not to think about retirement, you can see a graph. Here’s what’s crazy. Of the one who says, “I prefer not to think or concern myself with retirement investing until I get closer to that date,” between everybody, 42% say they don’t want any worry about it.
Generation Z is bigger. That’s over half. The same thing with Millennials, about half, but Baby Boomers, still about 25% don’t even want to worry about it. Here’s the thing. Getting back to the psychology behind this, for those that either you’re in the situation or, like in my position, where I’ve heard people talk about this, this shouldn’t be a big surprise.
What they recommend by a Northwestern Mutual study is they think you should save about $1.27 million for a comfortable retirement. That’s not too far off from the stats that I came up with if you want the average spending that a Baby Boomer has now. That’s not too far off. Here’s the thing. They say there are two big reasons why people don’t want to concern themselves with it. One, because it’s so far in the future, especially if you are a Zoomer or Millennial. It’s not that big of a concern yet. You have to worry about things going on now.
As they say, we don’t sleep enough. We text and drive, overeat, and don’t take our medication. We have other things to remind on the here and now. The second thing is that people never want to feel like they’re failing because who wants to think that they’re failing at this? That, I will tell you, is truer than anything. I want to get down to this final paragraph here because that’s going to lead me to what it would take to retire based on average spending for somebody now, but more importantly, what it takes for you and if there is a better way.
This is the thing that is so interesting. Here’s a suggestion for the financial industry. There are all these calculators that say, “You need $4 million to retire,” he said. “That’s not going to happen for almost everybody. It creates the feeling of failure.” If you see what it takes to get $4 million, it does create a feeling of failure.
If you see what it takes to get 4 million, it does create a feeling of failure. Click To TweetWhat the savings industry needs to do is to say, “How do we give people the feeling that they’re successful? How do we give people the sense that they’re not failures? How do we get people a sense of progress and achievement? That’s incredibly important.” That is where I come to you now. That’s exactly it. How do you not make them feel like failures? I’ll tell you how because I was a financial advisor. This is how you make them not feel like failures. You over-promise on the numbers. That’s how you do it.
This is what got me to leave in the first place. Remember, I was a financial advisor twenty years ago. One of the big things that bugs me is if I put in realistic numbers, it didn’t look good. Even though my realistic numbers I was showing back then, I’m finding out today that they were even realistic. They were still overly optimistic. Even though I thought I was being conservative with my numbers, it wasn’t true and I was still feeling depressed.
This is a big problem. Remember, they’re all saying, “We’ll just make people feel better about it.” Let’s say that you have you’re going to put away $10,000 a year. That’s about $833 a month on average. You’re going to put away $10,000 a year and let’s say that you happen to get an interest rate of 8%, which is a little higher than the SP500 is doing.
I’m putting an 8% because I’m factoring in for 401(k) matches. I’m assuming that you’re going to be using a 401(k). I say a percent because if you read my other episodes before, the retirement funds with Fidelity underperform the stock market by 2%. By the time you factor in with the match does, it creates about 1.5% to 2% max extra return over the long haul of 40 years. I’m putting an 8% saying, “You might get at least 6%,” which is still better than what the Fidelity accounts are doing. Again, I’m trying to be still a little bit overly optimistic against my point of view.
Playing devil’s advocate is my point here. I’m going to give you 40 years of retirement. Say, you’re 25 to 65, $10,000 a year. Here’s the one thing that you might want to argue with me on, inflation. They’re going to tell you they target inflation at 2%. Let’s just put in 2% because you got to have that. Here’s the thing. If you want to be able to make the statistics work, here’s what they are. The average social security payout bumped up. It’s now about $1,800 a month, but they say the average Boomer is spending about $63,325 a year, or in other words, roughly about $5,300 a month. That means you need about $3,500 a month to bridge that gap. That’s $42,000 a year.
To have $42,000 a year and not worry about running out of money, you should only be pulling off 3% a year. These are the statistics that have been coming out for the last few years. It’s not new. We questioned it twenty years ago about the 4% rule. The 4% rule was based on numbers all the way through the year of 1976. Understand that in 1976, things have changed. We barely were taken off the gold standard before that. Inflation is worse nowadays, and people are living longer than they were in 1976. That was the year before I was born. That was almost a half a century ago.
We were basing these retirement statistics on is 4% rule on something that’s almost 50 years old. Not going to work, especially because even though life expectancy has gone down a little bit in the last five years or so, still, it’s up there because if you lived to the age of 70, if you’re a woman, you have a 60% chance of living until 90. That’s another twenty years. Even for men, you still have a 25% chance of making it past 90. If you’re in your 40s now, you have a very good chance, especially as a woman, to make it to 100.
Understand that if we’re talking about the retirement age being 65, living to 90, that’s still 25, maybe more years that you’re going to be pulling out money. Especially given inflation and the fact that you’re not going to be trying to gamble your money in the stock market because you could lose all your money before you die, 3% is probably a very good number at most. You should be pulling out. What does that mean? That means you got to take whatever that number is per year that you need to bridge that gap times the buy at 33.33. What do you get? $1.4 million.
I’m going into these weeds of numbers for you folks who know what I’m talking about here. You’re going to need $1.4 million to be able to pull off that 3%, that bridge that gap between Social Security and what you need for an average retirement. That’s only $5,300 a month. That’s not a lot. Many are living on a good budget. It could be relatively comfortable, depending on the state they live in or the lifestyle they have, but depending on the state, that’s not a very comfortable lifestyle either. It could be a bigger cost. If you’re living in California, New York, Jersey, or places like that, you could be paying more money.
$1.4 million is what you need after inflation. Notice this, $10,000 a year, 8% for 40 years, 2% inflation, here it is, $1.267 million. You almost made it with 2% inflation. If you wanted to get to $1.4 million, add $12,000. They are about $1.5 million. If you can say about $1,000 a month, you could get there if inflation was only 2%, but it’s not.
This is what it is as a financial advisor. I put inflation down around 2% because I want people to feel better. What if I change it to 5%? The reason I say 5% is this. You go to ShadowStats.com. You’ll see there are different charts, one of which is the one from 1980-based. They started changing things after the ’70s. The government started adjusting the consumer price index, one reason is, so security can last longer. They don’t have to raise it as much quicker than the cost of inflation and living increase. That’s where I got that number. $1,827 a month is the average Social Security payout now in 2023.
That’s great, but that’s them trying to keep the numbers down. Since Carter’s era in the 1970s, that’s why this guy who created ShadowStats.com was basing it on government statistics versus airline profits. It wasn’t working out anymore because the actual real cost inflation versus what the government was reporting was changing. This is every president. It’s not like this is a one-time thing or only a Democrat thing. Republicans have done this just as much as Democrats.
Notice The Trend
Although, Democrats definitely did a pretty bad job, especially after 1990 when we started seeing some big adjustments happening. They start adjusting percentages of what things you count in inflation. Notice the trend. Going in the 1980, the numbers are fine. It’s high inflation back then because high-interest rates were skyrocketing. Everything was going crazy. We had 15% inflation, then it comes back down to the low single digits.
Notice, the red line is what the government is reporting versus what they were reporting before. They started making adjustments so that now inflation is a little bit less. It’s just a few percent, then boom. We even get to the ‘90s. Inflation is going higher on that old scale, but it looks like it’s flat throughout the ‘90s and into the 2000s. It stays right around 2% to 5%. This is why we were talking about 3% inflation back in the day as financial advisors.
Remember, the Fed said they’re targeting 2%. We saw that in 2010. You can see it was down there around the lower portion, 2% to 3% until we see it skyrocket, but notice. When it was around 2% to 3% up here in the original equation, it’s right around 8% to 9% and almost 10%. It’s about 7% more than what the governor’s reporting today. That’s how much they’ve altered and jacked with these inflation rates. If they say it’s 2%, they’re saying, “It’s more like 9%.” When I’m saying, “I’m putting in 5% here,” I’m pretty much saying, according to the statistics of the government with their reporting, that would be deflation.
That’s less than 0% of the inflation rate. I’m being conservative, playing devil’s advocate against my own point. Watch what happens. You go from $1.5 million, which means you live on $45,000 a year at 3%. Now, you’re right around under $15,000 a year with that 5%. Remember, you need about $1.4 million and you’re about $1 million short with a 5% inflation rate. This is what depressed my clients, even when I showed 3%.
I’ll even show you 3% because I show 3% sometimes. Sometimes, I show more. “It’s $1 million. It’s not enough.” “You have to save more because of inflation.” “Fine. I’ll make it 2% so you feel better. We made it.” This is why financial advisors can legally lie about numbers. I’m putting this back to 5%. It’s a very conservative inflation rate.
The truth is, it’s probably closer between at least 5% to 10%. One thing I didn’t mention is if you have a 401(k), you still have to pay tax. Let’s say you put it only at 25%. I think taxes are going to go up more than that, but let’s just say 25%. Now you’re inflation power got knocked down to $275,000. For context, that means you’re living on $8,000 a year. We’ll say less than $700 a month on top of your $1,800 a month. You’re at $2,500 a month. You still need to double that.
As A Financial Advisor
What do we need to do to get that to $1.4 million because now we put in taxes? We got to put it in reality. Again, I didn’t want to show that as a financial advisor. You want to show the big number. By the way, you focus on this big number. We say, “You got almost $2 million, saving $12,000 a year. That’s awesome. You only put in $480,000.” Now you’ve pretty much quadrupled your money over 40 years, but inflation is fighting you the entire way.
What would I have to do to get that after-inflation number from $275,000 to $1.4 million? It got to be a lot more. It has to be about five times. I’m going to put in five times. I’m going to try $60,000. I don’t know but let’s find out, $60,000 a year. We almost got there. I’ll make $61,000 and we got the $1.4 million. As long as inflation doesn’t go more than 5%, as long as taxes don’t go higher than 25% for you, you can now save $5,000 a month so that you can live on $3,500 a month in retirement.
Do you see a problem here? Do you see why people may not want to keep looking at this? If you want to put in realistic numbers, it is depressing. It makes it seem like it’s an impossible uphill battle. Specifically because inflation is surpassing what people need, this is why people more and more feel like they’re losing. They’re losing badly. This is important. This is why people are so worried about running out of money. This is why 35% of people who have over $1 million in their retirement accounts today still think it will take a miracle to retire because they’re trying to get to at least $1.4 million. That’s for trying to live on $3,500 a month in retirement on top of your Social Security.
That’s not a lot to live on. I’ll tell you, most people talk to us and say, “My goal is $10,000 a month or $20,000 a month,” because they want a very comfortable lifestyle where they have freedom. Not just living on a fixed budget. They don’t want to live on that fix a little budget and worry about running out of money. They want more. This is where I tell people you can do much better. Remember, for them to get that $1.4 million, what they needed after 40 years is about $10 million.
Let’s say you want to try to retire in 40 years. What does it take to get to $10 million? What if you didn’t have to do that much? I’ll put this back down to $12,000 a year, but let’s say we can make 11% a year after 40 years. The thing is we could get tax rates down. I’m going to leave everything the same. What happens? We’re still short, aren’t we? Eleven percent a year, if that’s all you ever do, it’s still short. It’s better. Your buying power is now about $15,000 a year versus before.
Before, you were down around $275,000, so you get about double here. If you want to be able to do this, still $34,000 a year at 11%. What if I can make 12%? By the way, in real estate, I can do it. This is this compounding interest. This is not anything else. It powers better. I don’t have to do as much. There it is, about $28,000 if I make 11%. That’s with the same tax rate and everything else.
I can have less taxes. What if I buy a certain type of real estate where I’m able to depreciate a lot of those returns? I make less. I’m presuming that if someone were to put different alternative investments that we have connections to like a debt fund, you’re going to pay taxes on that. You’re still going to deal with inflation, but you can still now save $28,000 a year starting today to get there. It’s where you have that. That’s not very impressive. It doesn’t feel good to have to save $20,000 a year to get there.
What makes it possible? The fact that if you not just buy into these alternative investment funds but you start buying real estate, you start getting better returns, especially if you’re using a mortgage. This is true if you buy your own property. There’s possible appreciation and things that come from there. I’m not trying to promise any appreciation because you never know. There could be years where you don’t make money or that even the property goes down in value.
We’ve seen that before in history, but it can go up. I’ve mentioned several of my properties that have increased quite a bit. Even after 2021 when there was the highest inflation and the price came down, I still sold properties where I bought them for $180,000, but still selling them for $220,000. You do the math on that, I still made about a 20% increase in my appreciation. Not including the fact that my rent is paid down my mortgage for me and the cashflow that I made on these properties.
I’ll tell you that I’m picking these properties specifically because the cashflow wasn’t always great. Some of our renters didn’t necessarily take great care of the property. We had to put a little extra money into it than what we would like to have done, worse than our typical property. I’m using an underpromised type of situation here with the rental property that I bought. Still, with the cashflow that we made, the extra appreciation that we got, and the profits we’ll get from the property even after selling it, we still walk away with over $50,000 profit from that property.
My down payment on that was about $40,000. In two years, I still walked away making over 100% return on that. Now that I say it, it sounds awesome because that was nice. I put $40,000 down payment and still walked away with an extra $50,000 profit. Not too shabby, not for two and a half years. I’m not making promises, but what if I said I put this instead of 50% or even 40%? That would be roughly about 40% in return. I put it at 25%.
What happens? Now, you’re buying power is a lot more. You’re doing a lot more with it. You don’t have to wait 40 years. By the way, that would be a better tax bracket, but still, I’m going to leave it all the same just in case. If I did reduce that to even 20%, all I said now, is it’s $31 million. That’s not too unreasonable right there. What that means is I can get to that much faster. What if I did ten years? See what it is. In fifteen years, $1.1 million. That means probably about seventeen years. Not even that much.
We’ll say sixteen and half years. We’ll round up there. I’m putting away and I’m making just 25% a year on my real estate. At that same $28,000 that I was saving before, even better. If I were saving the $61,000 that I had to do before to make retirement in 40 years, guess what? I still double that. I can now do it faster. In doing that same thing, I could do it in about eleven years.
In eleven years, I’m almost there. Now, inflation is not that much concern because I’m still keeping pace with it. If I were to put away the $5,000 per month starting from zero and make a 25% return on that, now it only takes eleven years to get to that, and if I could reduce taxes, it would be even better. That right there is what we teach. Many of our people already have savings. They’ve already started. That’s great.
Sometimes they have an appreciation for properties. Can we get the equity from those properties and get it to use? The big thing is, how do you get the money you’ve been locking away into retirement plans that have been proven as we’re showing here not to be working well versus taking that money and putting it elsewhere? If you’re starting from zero, it’s not going to feel like much. Your biggest thing, if you’re starting from zero, is to get as much profit as you can to save as much as you can to be able to build up that cash so then you can invest. I’m not making a promise to return to 25%. Could you make more? Yes. Could you make less? Definitely. You could make more or less.
Outpace Inflation
Here’s what I’ve seen. Over time, it works better. You outpace inflation no matter what the inflation rate is. You can do that if you’re making double-digit returns. That’s the returns that we always go for. That is the answer. Financial advisors don’t have the answer. In fact, to talk about alternative investments or investing in real estate, they don’t want you to do that. Why? It’s because they don’t have a license to advise you, necessarily. They have a license to sell. That’s what their licensees are.
When they get that series 6 and series 63 or series 7 and 65, all those licenses get them to do is allow them to sell you products. Primarily, mutual funds and insurance. All the ones I mentioned were just mutual funds. It gets you to sell you stuff in the stock market. The problem is the stock market hasn’t performed enough and everything else we’ve talked about hasn’t done well enough for you. It’s just not enough.
That’s why people are living on tighter budgets as they move into retirement, or what’s happening, as you’re starting to see with Baby Boomers, is to keep expecting to work. I’m all for having the ability to keep working in retirement because I am too. I’m doing it now, but it’s much more powerful if your work is optional, meaning that you’re working because you want to, not because you have to.
You show up. You’re doing it because you have a sense of purpose. It gives you purpose and meaning. Many financial advisors are trying to teach this more because they know that their plans will fail. They’re trying to tell you, “That’s what you need to do. That’s what you should be doing because you don’t want to just retire and die.” I agree. I don’t like the word retirement necessarily.
I do like the fact of talking about life savings. That’s what you’re trying to do. You’re trying to create a life-saving for your own life, savings that will carry you through no matter what happens. Even if you have to stop working or even if you want to keep working, you’re still okay. We have plenty of clients that do that. They got out of the rat race and they’re still working. Now all the income coming in is gravy. Guess what they can do with that money? They can keep adding to it to keep increasing the cash so they get month after month and year after year allowing them to far surpass inflation and be comfortable.
Create a life-saving for your life. Savings that will carry you through no matter what happens; even if you have to stop working, you're okay. Click To TweetNow they have a purpose and a reason, but they don’t have to do it. They can work part-time all they want. That is the choice they have. That is the choice I want for you too because I don’t want you to be struggling and being like everybody else saying, “It wasn’t enough. How depressing. I don’t want to look at my money.”
Whatever you ignore and stop looking at will leave you. If you ignore your teeth, you’re going to lose it. If you ignore your family, you’ll lose them. If you ignore your money, you’ll lose it too. This is why people keep working. Not because they want to, but because they have to. This is why people feel trapped. This is why they worry about living too long. Like I said, if you’re a woman, even if you’re 65 years old now, you get over a 50% chance of living until 90 years old. If you’re 40, like I am now, if you’re a woman, you could live out to be 100 years old, and men 80 years old. Give or take.
Maybe in 90 years, but if you’re a man, you’re not going to be thinking, “Screw her. Forget her. I’m going to take care of myself.” No, you want them to take care of themselves too. That’s why you probably want life insurance. Things like that can help bridge that gap. I’m here to tell you that there is hope because if somebody says, “I want $100,000 a year,” great. You got $1.2 million now? Sometimes yes and no. $1.2 million, if it earns 10% a year, $120,000 a year, that’s $10,000 a month. You did it.
This is how many of the clients and the ones that we have on here, too, come to this and say, “I thought I would maybe never get to a point where I could retire or never at least in the next several decades be able to retire.” Now they’re saying, “I can do the next 5 or 10 years? This is incredible.” That’s the freedom. I don’t know the future. I don’t know if you’re even going to be alive tomorrow. I hope you are. I hope I am. The one thing we can do is we can affect today. It’s not about just living for tomorrow and hoping for someday or retirement because you may not get there.
You may not have the chance of freedom to experience and enjoy the life you want now. I’m saying this just for myself as well as everybody else. You have today. What are you going to do with it? What are you going to do with this knowledge? Will you keep throwing your money in and hoping because everyone else is doing it? “I want to be broke like everybody else.” Are you going to do that or you’re going to do something different that does work?
It worked for millions of us, myself included, and many of our clients and people who were invited to the show. All of us get it. We understand it and experience it. That’s my invitation for you. If you want to know how to do that, you can go to take that Passive Income Calculator on our website at MoneyRipples.com and see what you can do today. Have a wonderful prosperous week. We’ll see you later.